Two Solano County cities are joining the cities of Sonoma and Yountville on Election Day in the pursuit of happiness for citizens and a possible pot of gold for local government from cannabis. Reports the North Bay Business Jnl
Like other cities and counties across the state before them, Fairfield and Vacaville voters will decide Nov. 3 whether to provide a pathway for cannabis businesses to operate legally.
Fairfield’s Measure C would allow two retail dispensaries, one manufacturer and unlimited testing labs in the Solano County city. The tax would also generate between $237,500 and $360,000 in annual general fund revenue at a rate of 6% on retail and 4% on other cannabis-related businesses.
“This has been touched upon over the years in study sessions, and people have come to realize this is legal now,” city Community Development Senior Planner Amy Kreimeir said, referring to adult, recreational use becoming legal through Proposition 64 passing in California in 2016.
Kreimeir said the plan received “no pushback” as it was being created earlier this year. Running parallel with the tax measures, the city’s application period for suitors to run a dispensary closed Oct. 23.
Vacaville has placed Measure V on the ballot with the intent of receiving general fund revenue ranging from 2- to 6% in gross receipts, “depending on the type of cannabis business,” the ordinance reads. Cultivation operations will be taxed between $2- to $10 per square foot of space. It’s estimated the tax windfall may amount to more than $400,000 a year. The tax earmarked for the city’s general fund would be imposed only on commercial cannabis businesses and not on individuals.
The city has no businesses signed on to fulfill the role of operating a dispensary but decided to let the voters decide on the taxation first. Only cannabis delivery is legal within its boundaries for now.
“We grappled with this for a few years,” City Attorney Melinda Stewart said. “The original law was so new, no one knew how this would play out. There have been inquiries (from interested business operators). It’s been a deliberate process.”
The extent of how communities have embraced the concept of an industry considered illegal by the federal government is still up in the air in California. To some industry stakeholders, the process has inched forward and taken shape at a slow pace.
“Everything has moved slower than expected. We thought the state would give out licenses for a few years and be done with it,” said Michael Perlman of Pearl Pharma, a cannabis production company in Santa Rosa.
Yountville has decided to step up its progressive tendencies by bringing ballot Measure T to voters, which would allow for a cannabis retail business. It establishes a 3% tax on the operation’s gross receipts. An estimated $30,000 to $100,000 could be raised from such a venture, the ballot measure’s language reads.
Town Manager Steve Rogers told the Journal the measure was the result of the council listening to the community. Proposition 64 was passed by two-thirds of the town’s voters in 2016.
City of Sonoma voters face two measures. Measure Y was initiated by a cannabis cultivation advocacy group to allow growing within the city limits. The city brought forth Measure X, which allows the local government to collect 4% in taxes on gross receipts on its first retail storefront.
When it comes to dispensary permits, the city remains in a paused position. It chose SOSPARC, a Sonoma version of the SPARC cannabis dispensary that operates in Santa Rosa, but the City Council split the 2-2 vote with one of the councilman recusing himself from the action item.
“There’s no dispensary (selected at this point),” Community Services Director David Storer said. The certified planner noted the city may attempt to reissue a permit to SPARC at a future date or opt for another operator.
Either way, Sonoma may have its tax structure in place by the time that happens. And with local governments grappling with the loss of sales tax and transient occupancy tax revenues as a result of massive lodging, restaurant and retail losses from the COVID-19 economic crisis, the welcome mat may be put out more frequently.
“You’d think cannabis offers a unique opportunity to address a number of pressing issues for governments at a local, state and national level. It would help to address the shortcomings of their budgets by a well thought out tax structure,” said Matt Barron, a Marin County cannabis business investor operating 12/12 Ventures.