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Woodlake continues to weigh in on weed, sales tax

Woodlake continues to weigh in on weed, sales tax

By Paul Myers

@PaulM_SGN

woodlake – The clarity of Woodlake’s potential revenue stream from cannabis and increased sales tax is more than hazy. In fact it took two public hearings in a row to try and hash out the salient details. But ultimately the decision to allow cannabis businesses in the city and whether to place a sales tax increase on the ballot is up to the City Council. And they are not slated to make that decision till later this month.

According to community development director Jason Waters last week’s second public hearing revolved largely around cannabis. And the business of cannabis on its own is complicated. Waters noted that the City needs to make a decision before Jan. 1, 2018, when businesses are allowed to start selling marijuana recreationally.

“Not doing anything is doing something. If by January 1 we don’t do anything that puts the City in a bad position,” Waters said.

Allowing cannabis related businesses in the city is not a matter that needs to go before the voters. And while the Council is currently taking suggestions from residents and the Citizens Advisory Committee (CAC) on cannabis related businesses, it is ultimately up to the Council whether the City will move forward. However, taxing businesses is a matter that needs to go before the voters which is what would be on the ballot in November of this year if the Council chooses to move forward on cannabis businesses. And if the Council chooses not to allow cannabis businesses in the city then there would not likely be a tax on the ballot. As a long term consequence, if future councils want to allow cannabis businesses in the city then they would have to go back to the voters to levy a local tax up to 10%. But that tax is separate from the sales tax currently being analyzed by City staff and the CAC.

Under Prop 64 recreational marijuana sales are taxed by the State at 15% but cities can tax sales an addition 10%. But that does not include the city’s existing sales tax that pushes marijuana sales past 32% depending on the city.

Also according to Waters the CAC and City staff is analyzing safety measures for marijuana cultivation businesses which would require a separate business license from marijuana retail. Waters said that measure currently being discussed include 24 hour security camera streams to the police department, required key card access into the building, regulatory operation licenses that the City can revoke for ordinance violations, regulated signage, security fencing, adequate lighting and background checks on all employees.

Waters added that businesses will likely be zoned industrial and be located in the industrial district along Naranjo Blvd. There they will have to provide their own well for water which is not unique to industrial properties. And cultivation businesses will be taxed differently from retail marijuana sales. Waters said that other cities have taxed cultivation $25 per square foot for the first 3,000 square feet and then $10 for each addition square foot after that. But beyond additional revenue through cannabis sales, the City also stands to qualify for public safety grants funded through cannabis related sales tax.

Concurrently staff and the CAC are deciding between a three-quarter percent sales tax increase or a one percent sales tax increase. According to city administrator Ramon Lara the City needs to propose at least a three-quarter percent increase, which is projected to yield an additional $300,000 in revenue annually. A one percent increase would yield $400,000 in additional annual revenue.

 

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