Sugary Drinks Tax

A sugar-sweetened beverage is defined as any nonalcoholic beverage intended for human consumption that contains added caloric sweetener and contains more than 25 calories per 12 fluid ounces of beverage, including but not limited to all drinks and beverages commonly referred to as soda, pop, cola, soft drinks, sports drinks, energy drinks, sweetened ice teas, or any other similar names. The tax also applies to syrups and powders that can be made into sugar-sweetened beverages, for example, fountain drinks from beverage-dispensing machines.

A sugar-sweetened beverage does not include any beverage sold for consumption by infants, which is commonly referred to as infant formula or baby formula, or any product whose purpose is infant rehydration; any beverage for medical use; any beverage designed as supplemental, meal replacement, or sole-source nutrition that includes proteins, carbohydrates, and multiple vitamins and minerals (this exclusion does not include beverages commonly referred to as sports drinks, or any other similar names, which are defined as sugar-sweetened beverages); any milk product; and any beverage that contains solely 100% natural fruit juice, natural vegetable juice, or combined natural fruit juice or natural vegetable juice.

Distributors of sugar-sweetened beverages, syrups, and powders that make the first distribution of those products in San Francisco are responsible for paying the tax. Distributors include businesses, other than common carriers, that:

1. Transfer sugar-sweetened beverages, syrups, or powders in the City for consideration or any commercial purpose; or
2. Possess, store, own, or control sugar-sweetened beverages, syrups, or powders in the City for resale in the ordinary course of business that they obtained by taking possession of the product outside the City or from a common carrier inside the City. This includes retailers who obtain the beverages, syrups, or powders outside the City and bring them into the City themselves (known as “self-distributors”). Distribution excludes the retail sale to a consumer.

Retailers are not required to pay the tax as long as they do not obtain any sugar-sweetened beverages, syrups, or powders by taking possession of the product outside San Francisco (e.g., purchasing the beverages in Daly City and bringing them into San Francisco in your own vehicle) or from a common carrier inside San Francisco.

The tax for syrups and powders is calculated using the largest volume of sugar-sweetened beverage that would typically be produced by the amount of syrup or powder based on the manufacturer’s instructions or, if the distributor uses the syrup or powder to produce a sugar-sweetened beverage, the regular practice of the distributor. For example, if one ounce of syrup produces 8 ounces of a sugar-sweetened beverage, the tax would be $0.08 per ounce of syrup.

Retailers are not required to pay the tax as long as they do not obtain any sugar-sweetened beverages, syrups, or powders by taking possession of the product outside San Francisco (e.g., purchasing the beverages in Daly City and bringing them into San Francisco in your own vehicle) or from a common carrier inside San Francisco.

• San Francisco Business and Tax Regulation Code Article 8: Sugary Drinks Distributor Tax Ordinance 
• Sugary Drinks Distributor Tax Advisory Committee