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Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax <br />Updates <br />September 20, 2022 <br />Page 4 <br />2 <br />5 <br />0 <br />8 <br />Table 1: Proposed Financial Amendments <br />Item Impact <br />Amend (SAMC <br />Sections 21-127, 21- <br />133, and 21-135) <br />Amendment: <br />(1) Amend SAMC Chapter 21 (Licenses) provisions relating to <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 2022-23 <br />REVENUE <br />ESTIMATE <br />FY 2021-22 <br />Actual <br />Revenue <br />Received <br />FY 2022-23 <br />Revenue <br />Estimate <br />(Upper Range) <br />FY 2022-23 <br />Revenue <br />Estimate <br />(Lower Range) <br />CULTIVATION $1,223,376 $841,000 $640,000 <br />DISTRIBUTION $863,446 $595,000 $423,000 <br />MANUFACTURING $215,152 $190,500 $147,000 <br /> Total $2,310,974 $1,626,500 $1,210,000