SAN FRANCISCO—The San Francisco Board of Supervisors approved to put a hold on the new cannabis sales tax by a year, moving it from January 2021 to the end of 2021, Law360 first reported.

Approved in 2018, the exaction would put a sales tax on all marijuana based merchandise, 2.5 percent on receipts up to $1 million and 5 percent on receipts beyond $1 million. For businesses that sell cannabis, and who also receive revenue from other products, they will be taxed 1 percent on revenues up to $1 million and 1.5 percent beyond $1 million.

In order for a business to break even on the tax, president of the San Francisco Cannabis Retailers Alliance John Delaplane estimated it would have to around $7 million in revenue, at least.

While it was anticipated that more businesses would have been in operation by January 2021, the licensing of cannabis businesses have been slow because operators need about three years to open.

According to District 8 Supervisor Rafael Mandelman, he explained to the Board of Supervisors the reason behind the hold was to give cannabis businesses some financial relief because of the delay in licensing.

In a statement to the San Francisco Examiner, Mandelman said, “Now is no time to be imposing a new tax on small businesses. By deferring the Cannabis Business Tax by one year, we can help stabilize these businesses and provide time for the state to adjust its tax structure and for the Biden Administration to update federal policies.”