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Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax <br />Updates <br />May 3, 2022 <br />Page 2 <br />2 <br />5 <br />0 <br />8 <br />NS-2684) in November 2014 ending with Ordinance NS-2944 in May 2018. In November <br />2018, Santa Ana voters approved Measure Y (Ordinance NS-2962), which established <br />commercial cannabis business license taxes for adult-use cannabis retail sales, cannabis <br />cultivation, distribution, manufacturing, and testing. The most recent commercial <br />cannabis ordinance updates were adopted by the City Council in September 2019 <br />(Ordinance NS-2973). These updates amended various sections of Chapters 18, 21, and <br />40 of the Santa Ana Municipal Code (SAMC) to address horizontal and vertical integration <br />of cannabis businesses, to streamline and modernize regulations in response to State <br />changes allowing microbusinesses and shared manufacturing, and to establish <br />consistency among various SAMC sections addressing employee badge requirements <br />and minimum purchasing age. <br />Ongoing changes to State cannabis laws and evolving market demands prompt the City <br />to regularly revisit its ordinances and tax collection to ensure that Santa Ana: (1) maintain <br />its competitive position in the region; (2) remain compliant with applicable State laws; and <br />(3) streamline and equalize its implementation of non-retail commercial cannabis taxation. <br />In response to these changes, the City is proposing to update the SAMC in various <br />chapters and sections to address medicinal cannabis retail, consumption lounges and <br />temporary events, Measure BB Waitlist termination, retail facility relocation, commercial <br />cannabis eligible areas, commercial cannabis tax rate reductions for commercial <br />cannabis cultivation, distribution, and manufacturing, and adopt language addressing <br />proposed tax treatment of microbusinesses and share. These updates are intended to <br />foster an environment in which commercial cannabis businesses continue to operate <br />safely and in accordance with all applicable local and State regulations while maintaining <br />Santa Ana’s top position in the regional cannabis industry. <br />Proposed Amendments – Financial (SAMC Chapter 21) <br />Table 1 (Proposed Amendments to Chapter 21) describes the finance-related ordinance <br />amendments. Additional details are provided in the subsections that follow. <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 tax rate <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