Woodlake City Council sets cannabis tax rate
After several informational items, Woodlake City Council votes 4-0 with 1 abstention to set cannabis tax rate
By Paul Myers @PaulM_SGN
WOODLAKE – The role cannabis plays in filling public coffers has become clearer since Woodlake City Council voted 4-0 with one abstention to set tax rates. All together the Council decided to tax retail 5% of gross receipts, cultivation $6 per square foot, manufacturing 4% of gross receipts, distributing 4% of gross receipts, distributor transport and testing at 0% of gross receipts and nurseries $2 per square foot.
Discussions have carried on for months without much in depth discussion by council members, according to City staff. Measure S, passed by voters in November 2017, allowed the City Council the power to tax $25 per square foot or 10% of gross receipts on all cannabis businesses within the city limits. Also the Council asserted their power to approve different tax rates for each type of cannabis business, including dispensaries, manufacturing, testing and cultivation.
City staff said rates for other cities range between 2% and 15%. Within competitive markets, Sacramento has a rate of 4%, Stockton 5%, Sonoma County 2%, California City 6% and Monterey County 5%. Based on their research, staff suggested a range of 4% to 6%.
For cultivation, staff suggested a range of $6 per square foot to $9 per square foot, or a tiered rate that would average close to that amount. The numbers tend to fall in line with other cannabis friendly areas. Sonoma County taxes cultivators $3.75 to $11.25, California City $7, Monterey County $10, Farmersville $12 and Santa Rosa $5.
Woodlake City staff also proposed a 3% to 5% manufacturing tax rate. Rates state-wide rage between 1% and 15%, but in competitive markets like Sacramento, Sonoma County and California City rates range between 3% and 6%. Staff suggested a distribution rate of 0% for distribution transportation only and a 4% to 6% for distribution license. Competitive markets showed a 0% tax for Sonoma County, 6% for California City, 4% for Sacramento and 5% for Monterey County.
Thus far the City has not received any license applications for cannabis testing businesses, but staff suggested a 0% to 2% range for the businesses. Other areas like Monterey County, Sonoma County, California City and Sacramento set their ranges between 0% and 5%.
Lastly staff suggested a $2 per square foot range for nurseries, which the council accepted.
Aside from the two dispensaries currently underway in establishing their businesses, the City has accepted four other cannabis business licenses. Green Smart which will be locating at 1049 W. Ropes has been approved for three separate licenses; cultivation, manufacturing and distribution. Top Crop at 457 S. Acacia on the south-eastern portion of town east of Bravo Lake. They have been approved for cultivation and manufacturing but not distribution.
Lindsay City Council last said at their Feb. 27 meeting they are in the initial phases of working toward a cannabis business ordinance. City attorney Mario Zamora asked the Council to come up with questions before pen to paper over the ordinance. Already the City has a zero tolerance policy on cannabis businesses operating within the City limits. An ordinance could allow for cannabis business to operate in the City, but they will likely hold off on taking business license applications until voters pass a tax on cannabis products in the city.