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Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax
<br />Updates
<br />September 20, 2022
<br />Page 14
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<br />requirements will be based on a percentage rate of a business’s gross reportable revenue
<br />from the prior reporting year (0.50% from January 1, 2023 to January 1, 2024, and 1.00%
<br />thereafter). The Plan will document each of the business’s commitment to local hiring,
<br />local sourcing, community engagement and contributions, sustainable business
<br />practices, and consideration of social equity goals through paying prevailing wages, hiring
<br />from disadvantaged communities, supporting local non-profit organizations (NPOs), and
<br />job and skills training. Moreover, the Plan will quantify the value of each commitment
<br />therein. The format is also intended to enable businesses committing to certain social
<br />equity principles to apply for consideration by the State for tax credits, complementing the
<br />provisions of Section 17053.64 of the California Revenue and Taxation Code.
<br />ENVIRONMENTAL IMPACT
<br />In accordance with the California Environmental Quality Act (CEQA), these actions are
<br />exempt from further CEQA analysis pursuant to CEQA Guidelines Section 15061(b)(3),
<br />as the proposed amendments address business activities already permitted in the City
<br />and will not result in any significant physical effect on the environment. Because Santa
<br />Ana is a built-out, urbanized community, and the uses permitted and regulated by the
<br />cannabis ordinance are already allowed by the underlying zoning designations and the
<br />development standards in Chapter 41 (Zoning) of the Santa Ana Municipal Code, the
<br />updates to the ordinance will not lead to any cumulative or unforeseen impacts. A Notice
<br />of Exemption, Environmental Review (ER) No. 2022-15, will be filed for these actions.
<br />FISCAL IMPACT
<br />There is a projected fiscal impact associated with approval of the recommended actions,
<br />as they will reduce the projected commercial cannabis revenues for cultivation,
<br />distribution, and manufacturing as compared with the actual revenues received in FY
<br />2021-22. Assuming the proposed rate changes become effective January 1, 2023, the
<br />cumulative revenue reduction is estimated to be between approximately $685,000 and
<br />$1,100,000 for FY 2022-23; and between approximately $1,360,000 and $1,600,000 in
<br />FY 2023-24. However, other elements of the staff recommendations contained within this
<br />Staff Report relating to shared manufacturing, microbusinesses, and notably
<br />consumption lounges and temporary events, and allowing all retailers to sell both
<br />medicinal and adult-use cannabis, will likely provide some degree of offsetting revenues.
<br />Staff, however, lacks reasonable data on which to make increased revenue projections.
<br />Likewise, the addition of five (5) potential added retail sales locations, while encouraging
<br />in terms of future revenue; cannot, as yet, be counted on as a reliable projected revenue
<br />for the current 2022-23 fiscal year or the approaching 2023-24 fiscal year due to the long
<br />lead times involved in bringing such retail locations into operation.
<br />Failure to adopt the above recommended action items, however, would have a negative
<br />impact on a significant number of established cannabis businesses as well as pending
<br />commercial cannabis applicants awaiting adoption of those recommended items before
<br />committing to entering the approval, permitting, and licensing process and who will defer
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