April 23rd, 2026
Re: Proposed Increase to Cannabis Retailer Business Tax (4% → 6%) Dear Mayor, City Council Members & City Manager,
On behalf of Lemonnade Union City and Flor Union City, the two licensed cannabis retailers operating within the City, we appreciate the opportunity to provide input regarding the proposed increase in the local cannabis business tax from 4% to 6%.
We understand and respect the City’s responsibility to balance revenue generation with longterm economic sustainability. From our perspective as operators, the current 4% rate is fair and supports a competitive legal market. It is also worth noting that even at 4%, there are jurisdictions with lower effective tax rates, making regional competitiveness an important consideration.
At the same time, it is important to recognize the current realities of the cannabis market. Retail margins are under sustained pressure due to price compression, increased competition, and broader macroeconomic factors impacting consumer spending. In this environment, even modest increases in taxation can have disproportionate downstream effects.
This proposed 2% increase would be borne directly by consumers at the point of sale. As total purchase costs rise, customers have consistently shown sensitivity to pricing and often shift their behavior by:
• Purchasing in neighboring jurisdictions with lower taxes • Utilizing delivery services based outside Union City that do not contribute local tax revenue • Returning to the illicit market, where no taxes are paid Additionally, if consumer resistance increases, retailers may be forced to absorb a portion of the tax impact through pricing adjustments. Given already compressed margins, this would further challenge the sustainability of licensed operators who are committed to compliance, local employment, and long-term investment in Union City.
Our shared goal is a stable, regulated market that maximizes both legal participation and consistent tax revenue. In our view, maintaining the current 4% rate supports that objective by keeping Union City competitive, encouraging consumers to remain within the legal market, and preserving operator viability.
We respectfully encourage the City to consider the timing and broader market conditions before implementing any increase. A stable and competitive tax structure today is likely to generate stronger, more durable revenue over time than a higher rate that risks reducing overall sales volume.