Item 5.3: Increasing Cannabis Business
Tax Pursuant to UCMC Chapter 3.24
April 28, 2026 City Council Meeting
2 Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24 Background
• 2018 – Measure DD and Ordinance No. 854-18 established City Council’s authority to set cannabis business tax for the following activities:
• October 28, 2025 – City Council received recommendations from the Revenue Ad Hoc Subcommittee and its review of
the City’s various revenue streams – one of which
included the cannabis business tax.
Cultivation Distribution Manufacturin
g
Testing
Dispensary/
Retail
3 Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24 Background (cont.)
• For retailers, the current tax rate is 4% and City Council may adopt or amend the tax rate by resolution up to 6%. • To-date, two retail businesses have opened and are
currently in operation.
Policy Direction:
Provide report for City Council consideration of adjustment to cannabis business tax for retail cannabis businesses only (no other impact on other cannabis categories)
4 Revenue Trends
Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24 FY 2021-2022 FY 2022-2023 FY 2023-2024 FY 2024-2025 FY 2025-2026 (Two Quarters Only)
City of Union City
4% Cannabis Tax of Gross Receipts
5 Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24 Revenue Trends
• Cannabis tax collections at the 4% rate have shown a
gradual decline over several fiscal years.
• City Council must evaluate if the current tax rate supports City services or needs adjustment to stabilize revenue. • Maintaining competitive tax rates must be balanced with fiscal sustainability and local market conditions.
• If increased, revenue forecasts will be updated postCouncil action, based on retailers’ gross receipts under new rates.
6 AB 195 (2022) shifted tax
from cultivation to
retailers (up to 19%).
Regulatory
Changes
AB 564 (2025) restored
rate for retailers to 15%
through June 30, 2028;
to be reevaluated and
adjusted every two
years.
Excise Tax
Adjustments
Competition,
oversupply, and illicit
market presence
continue to pressure
pricing despite
regulatory
predictability.
Market &
Pricing
Pressures
Local tax changes
must be evaluated in
context of broader
industry dynamics
affecting retailer
viability.
Local Impact
Considerations
Statewide Regulatory
Environment
Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24
7 Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24 Regional/Local Tax Landscape
• Union City’s 4% cannabis tax rate is among the lowest in the Bay Area, highlighting its competitive position.
Counties and
Cities
Retail
(Storefront)
No.
Allowed Current Tax Rate
Maximum
Tax Rate
Alameda County
(Unincorporated) Allowed 5 None None
Alameda Allowed 4 None None
Berkeley Allowed No Limit 5% 10%
Emeryville Allowed No Limit 3% 6%
Hayward Allowed 3 7% 15%
Oakland Allowed No Limit
Tiered; Depends on
Gross Receipts and
Equity Rebates
5%-10%
San Leandro Allowed 4 5% 10%
Union City Allowed 3 4% 6%
8 Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24 Outreach to Retailers
• Staff informed Union City’s cannabis retailers about
potential tax rate changes and offered opportunity for
feedback/public comment.
• Two cannabis retailers submitted written public comment, attached to agenda packet for review.
9 Established
Rate
Single-Step or
Phased
Effective Date
A rate increase, if
any, from the
current 4%,
up to the allowable
range of 6%, can be
set to respond to
fiscal needs, market
conditions, and
industry stability.
A one-time tax rate
increase is simple to
administer and aids in
clear financial
forecasting.
Gradual tax increases
soften financial
impacts and allow
businesses time to
adapt.
A clear effective
date ensures
predictability and
allows both the City
and businesses to
implement changes.
Policy Considerations
Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24
10 Recommendation
Staff recommends that the City Council consider
adopting a resolution increasing the cannabis business
tax rate applicable to cannabis retail businesses
operating in Union City from the current four percent
(4%) to a specified tax rate no more than six percent (6%), as authorized under Union City Municipal Code Chapter
3.24. Item 5.3:
Increasing Cannabis Business Tax Pursuant to UCMC Chapter 3.24