Santa Ana’s Cannabis Shop Policies Praised for Boosting Community Investment, But Questions Remain

Voice of OC reports…

Several years ago, Santa Ana hatched an idea to pump money into some of its most underfunded — and neglected — quality of life areas by capitalizing on a product that some in town didn’t support, but which still existed in the community anyway: recreational marijuana. 

In 2018, officials asked voters to decide whether commercial cannabis should be allowed, placing Measure Y on the ballot. Their answer was “Yes,” and now City Hall licenses, regulates and taxes the legal cannabis shops operating in the city.

That same year, the city established a “public benefit fund” through which all the new annual cannabis tax revenue would be allocated to libraries, park improvements, and youth services.

Since that policy shift, a drug with public safety stigmas has essentially given the city some advantage on bridging funding gaps in historically underfunded priorities, and has even earned praise from the Orange County Grand Jury in a new June 3 report.

Grand jurors noted “there has been no apparent increase in criminal activity in the areas surrounding the retail adult-use cannabis dispensaries.”

But questions remain. Namely, a big chunk of that money from the cannabis public benefit fund also goes toward “enforcement” activities by code enforcement and the police department for what are supposed to be efforts to combat illegal, unlicensed dispensaries in the city.

Grand jurors in their report noted the city’s expenditures in the enforcement realm aren’t all that transparent.

“The OCGJ (Orange County Grand Jury) learned that there is no clearly identifiable accounting for residents to see how this money is spent,” the report reads, later adding it’s “been difficult to secure specific information about how the money for enforcement services has been used.”

Grand jurors in their report argue “there is no true, viable oversight regarding disbursement and use of cannabis money received.”

“Interviews with city staff indicated that various departments rely on Measure Y funds for their enforcement efforts … OCGJ has not received a clear breakdown of how the enforcement services money has been used by the various city agencies,” the report reads.

Voice of OC asked City Hall about these transparency concerns.

While city spokesperson Paul Eakins said the city has 90 days from the publication of the grand jury report to legally respond in court, he provided a breakdown of recent fiscal years’ revenues and expenditures out of the cannabis public benefit fund in an email.

In this current fiscal year, for example, the city is estimated to spend $9.6 million on youth services and libraries while also spending $3.4 million on enforcement and administrative costs. Within that enforcement realm, the city spreadsheet breaks down among which departments that money was divided:

  •   $987,350 for the City Attorney’s office for attorney time and court filings related to the enforcement of commercial cannabis laws.
  •   $354,030 for the Finance and Management Services Agency, whose expenses are largely for the collection and audit of cannabis business tax.
  •   $645,789 for the Planning and Building Agency, whose expenses are largely for code enforcement.
  •   $1,425,980 for the Police Department, whose expenses are meant to be for law enforcement activities.

Officials like City Council member David Penaloza wonder whether those city departments could be taking up precious cannabis sales tax revenue which could be going more to youth, parks and library programs.

“At the time (the measure was passed), we did have hundreds of illegal dispensaries that needed to be addressed,” Penaloza said in a June 3 interview. “Is there still a need for that much of a chunk to go to enforcement?”

Mayor Vicente Sarmiento agreed, recalling recent remarks he made at a budget hearing this month recommending the city revisit its enforcement spending of those cannabis dollars.

Santa Ana’s Cannabis Shop Policies Praised for Boosting Community Investment, But Questions Remain

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