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Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax <br />Updates <br />September 20, 2022 <br />Page 4 <br />Table 1: Proposed Financial Amendments <br />Item <br />Impact <br />Amend (SAMC <br />Amendment: <br />Sections 21-127, 21- <br />(1) Amend SAMC Chapter 21 (Licenses) provisions relating to <br />133, and 21-135) <br />Article XII (Medical Marijuana) - Section 21-127- to reflect <br />definitional changes, and Article XIII (Commercial Cannabis) - <br />Section 21-133 — to adopt a separate business license <br />category for consumption lounges and temporary consumption/ <br />special events and to reduce cannabis tax rates for commercial <br />cannabis cultivation, distribution, and manufacturing activities; <br />(2) by further amendment of Section 21-133 to administratively <br />simplify the taxation of shared manufacturing activities to <br />maintain Santa Ana's competitive advantage visa via these <br />commercial cannabis business activities, and to also relax and <br />equalize square footage assessment treatment as between co - <br />located cannabis distribution and manufacturing businesses <br />who are not horizontally/vertically integrated and those that <br />are; and (3) also amend Section 21-135 to equalize the tax <br />treatment of microbusinesses to insure fair treatment. <br />The recommended Commercial Cannabis Tax Rate <br />Adjustments, including a $2,000 basic tax rate per license, are <br />described in detail in Exhibit 4. <br />Impacts: <br />Reduction of commercial cannabis business license tax rates <br />for commercial cannabis cultivation, distribution, and <br />manufacturing activities, first effective January 1, 2023, is <br />estimated to result in lower end of fiscal year non -retail <br />commercial cannabis business tax revenue as follows: <br />• A reduction in the projected revenue in the range of <br />approximately $1,626,500 to $1,210,000 for FY 2022-23, <br />when measured against actual receipts for FY 2021-22 of <br />approximately $2,310,000; and <br />FY 2021-22 FY 2022-23 FY 2022-23 <br />FY 2022-23 Actual Revenue Revenue <br />REVENUE Revenue Estimate Estimate <br />ESTIMATE Received (Upper Range) (Lower Range) <br />CULTIVATION <br />$1,223,376 <br />$841,000 <br />$640,000 <br />DISTRIBUTION <br />$863,446 <br />$595,000 <br />$423,000 <br />MANUFACTURING <br />$215,152 <br />$190,500 <br />$147,000 <br />Total <br />2 310 974 <br />$1 6,500 <br />1 210 000 <br />City Council 25 — 4 9/20/2022 <br />