Marijuana tax to November ballot

“We currently don’t authorize any commercial cannabis activities in the city and approval of this measure would not change that,” Deputy City Manager Matthew Chidester said, according to a video of the July 31 meeting. 

Chidester said if voters approve the tax measure, but not commercial cannabis activities in November, then the city would see just $64,000 annually in tax revenue from out-of-town delivery operations. If additional commercial cannabis activities were authorized in November, then the city could see between $700,000 to $1.5 million a year in tax revenue, he said.

The tax measure creates a maximum tax rate for each type of cannabis business. For cultivation, including nurseries, the maximum tax rate ranges from $2 to $10 per canopy square foot depending on the type of cultivation. Retail, including dispensaries and delivery businesses located in the city, would be taxed a maximum of 6 percent of gross receipts; testing labs would be taxed no more than 2.5 percent of gross receipts; distribution businesses would be taxed at 3 percent of gross receipts at most, and manufacturing businesses would be taxed a maximum rate of 4 percent of gross receipts. 

The council can decide the tax rate, but it must have voter approval if it wants to tax commercial cannabis more than the above maximum rates.  

The measure also creates initial tax rates for commercial cannabis, which Chidester said is typically low for new businesses at first to give them a chance to grow and to see what tax rates they can manage.

Those initial tax rates range from $1 to $7 per canopy square foot for cultivation; 4 percent of gross receipts for retail; 1 percent of gross receipts for testing labs; 2 percent of gross receipts for distribution; and 2.5 percent of gross receipts for manufacturing.

In November, voters will consider four other items about cannabis. One is whether nurseries should be allowed to grow immature non-flowering cannabis plants to be sold outside the city. Voters will also consider three advisory measures on cultivation of mature plans, manufacturing and retail.

zachary@smdailyjournal.com

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