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Ordinance Amendment No. 2022-01 - Commercial Cannabis Regulatory and Tax <br />Updates <br />May 3, 2022 <br />Page 3 <br />2 <br />5 <br />0 <br />8 <br />Table 1: Proposed Financial Amendments <br />Item Impact <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 is estimated to result in a reduction <br />of non-retail commercial cannabis business tax revenue in <br />the range of approximately $730,000 to $920,000. <br />Current <br />FY 2022-23 <br />Revenue <br />Projections <br />Potential <br />Revenue <br />Reduction <br />(Lower Range) <br />Potential <br />Revenue <br />Reduction <br />(Upper Range) <br />CULTIVATION $1,250,000 $312,500 $387,000 <br />DISTRIBUTION $1,150,000 $287,500 $371,000 <br />MANUFACTURING $130,000 $129,750 $159,000 <br /> Total $2,530,000 $729,750 $917,000 <br />The foregoing non-retail commercial cannabis figures do not <br />include potential offsetting revenues which may be anticipated <br />from future shared manufacturing and microbusiness revenues <br />and from the enhanced natural growth of Santa Ana’s non- <br />retail commercial cannabis business community which will be <br />encouraged by the rate reductions, and the simplification and <br />equalization of tax treatments for cultivation, distribution, <br />manufacturing, shared manufacturing, and microbusinesses. <br />At present, however, the City is lacking in sufficient information <br />to reasonably project such additional revenues. <br />Likewise, the City may anticipate future increased revenues <br />from primary manufacturers and participating shared