Item 22 - Ordinance Second Reading - Commercial Cannabis Amendments

Home Browse Search

Ordinance Second Reading - Commercial Cannabis Amendments October 4, 2022 Page 2 2 9 9 1 2. Remove language allowing termination of the Measure BB Waitlist; 3. Reduce all medicinal and commercial cannabis retail taxes by one percent (1%) and update the City Council on fiscal impacts within one year of the effective date; 4. Incorporate language codifying certain social equity measures in order to qualify for an additional two-percent (2%) reduction in adult-use commercial cannabis retail taxes; 5. Incorporate language codifying priority processing of commercial cannabis consumption lounge applications for social equity retailers; 6. Require locally-sourced cannabis products and foods to be sold at temporary consumption festivals. 7. Incorporate administrative clarifications specific to commercial cannabis eligible areas and other minor provisions. The ordinance and accompanying resolutions were subsequently updated to reflect these topics, and the ordinance is included as Exhibit 1 (redlines reflecting changes at first reading) and Exhibit 2 (clean). ENVIRONMENTAL IMPACT In accordance with the California Environmental Quality Act (CEQA), these actions are exempt from further CEQA analysis pursuant to CEQA Guidelines Section 15061(b)(3), as the proposed amendments address business activities already permitted in the City and will not result in any significant physical effect on the environment. Because Santa Ana is a built-out, urbanized community, and the uses permitted and regulated by the cannabis ordinance are already allowed by the underlying zoning designations and the development standards in Chapter 41 (Zoning) of the Santa Ana Municipal Code, the updates to the ordinance will not lead to any cumulative or unforeseen impacts. A Notice of Exemption, Environmental Review (ER) No. 2022-15, was filed on September 23, 2022 for these actions. FISCAL IMPACT The September 20, 2022 staff report included an estimated loss of revenue, ranging from $685,000 to $1,100,000 for Fiscal Year (FY) 22-23, resulting from the proposed across the board non-retail commercial cannabis supply-side tax rate decrease of five percent (5%), and assuming an effective date of January 1, 2023. The midpoint of that estimated range is $892,500. The estimate for a full year of impact in FY23-24 ranged from $1,360,000 to $1,600,000, with a midpoint of $1,480,000. On September 20, the City Council amended the proposed Ordinance to decrease the retail tax rate across the board (medicinal and nonmedicinal) by one percent (1%). Actual FY21-22 revenue for both medicinal retail and adult-use retail, along with the impact of a one-percent (1%) decrease is as follows: