Residents of Grover Beach will decide the fate of a plan to tax businesses that work in the marijuana industry. The levy would include medical cannabis and, quite possibly, recreational pot use should California voters approve legalizing it in the November election.
“It’s a measure that would tax commercial marijuana businesses that may be allowed to operate within the city,” said City Manger Matthew Bronson during a recent candidate forum. “It would apply to both medical and non-medical marijuana businesses that may be allowed to operate as permitted under state and local laws.”
As it reads, Measure L-16 would establish an annual commercial cannabis tax on medical marijuana businesses at 5% of gross receipts and non-medical marijuana businesses, where permissible by law, at 10% of gross receipts; on cultivation and nurseries at $25 per square-foot for the first 5,000 square feet and $10 per square foot thereafter.
Based on the projected level of activity, over time the tax is estimated to generate one to two million dollars annually. It would not sunset and may be adjusted annually based on the Consumer Price Index.
“This type of tax would be paid for by the businesses rather than by customers directly as done for a sales tax,” Bronson said.
It requires a simple majority of votes to pass.
“Measure L-16 would cover a variety of marijuana businesses such as cultivation, nurseries, manufacturing, testing, and retail dispensary businesses,” said Bronson. “The council has directed city staff to draft a land use and regulatory ordinance that would govern the location, the type, the number of such businesses, and really but some very clear, local control around such businesses.”
The council is expected to consider the ordinance in early 2017.
In July, the council directed staff to initiate zoning laws permitting cannabis use that would allow businesses to open shop, commercial cultivation, manufacturing, and laboratory testing.
At that time City Attorney Martin Koczanowicz said, “Under state law they need to be separate entities. You cannot have the same entity doing all of the activities. State law tries to separate to ensure quality control.”
Currently the city prohibits brick and mortar and mobile dispensaries but a plan is in place to cluster the cannabis businesses in one area.
“The possible location of these businesses would be in the industrial area in the southern part of our town bordered by Highland Way, Farroll Road, 4th Street and 13th Street,” Bronson said. “The council has also directed staff to include a 100-foot setback from residential properties for the dispensary businesses.”
Should voters approve legalization to allow recreational use of cannabis in California similar to Colorado, Oregon and Washington, there would be a 15% statewide excise tax, in addition to the sales tax rate of each jurisdiction, on cannabis activities. However, it does exempt medical marijuana from some taxation.
Several cities including Santa Cruz, San Jose, Palm Springs, Oakland, and Sacramento have approved tax measures and the cities of Santa Barbara and King City will have tax measures on the November 2016 ballot.
As of 2003, California allows issuing identification cards for qualified patients and allowing patients and their primary caregivers to collectively or cooperatively cultivates medical marijuana. Law does not regulate or restrict local zoning requirements for medical marijuana dispensaries. However, uncertainty remained as federal law continued to categorize marijuana as a controlled substance.
In October of 2015, Gov. Jerry Brown signed the Medical Marijuana Regulation & Safety Act, a comprehensive package of bills to establish a regulatory structure for medical marijuana. Cities were desperate to establish policy if only to keep some control of the issue. Individual municipalities would continue to manage local medical marijuana legislation via the established laws related to cultivation in place Mar. 1 of this year.
