65A - RPT - REGARDING MEDICAL MARIJUANA INITIATIVE

Home Browse Search

(2) a $500 Medical Marijuana Dispensary Registration Application Fee (bi- annual), and (3) a 1 % local allocation of the current 8% Santa Ana California Sales Tax. To determine the revenue which may be expected from the application of the 2% gross receipts tax on medical marijuana sales by registered Santa Ana medical marijuana dispensaries it is necessary to arrive at a reasonable citywide gross medical marijuana sales figure. Since the City has no reliable source for providing this figure directly it is necessary to arrive at one by way of a comparison to other cities for which a gross sales figure is obtainable. Based on citywide per capita gross medical marijuana sales for the cities of San Francisco, Oakland, and San Jose, and imputing the average figure to Santa Ana, the resulting annual citywide gross medical marijuana sales for the City are $17.7 Million, or approximately $805,000 per registered dispensary. Applying the 2% gross receipts tax rate to this figure and adding the required application processing charge yields a business license tax assessment of about $16,100 per dispensary.4 By extending this $16,100 per dispensary business license tax assessment by 22 registered dispensaries an aggregate assessment of $354,200 is computed. Note: due to the limited number of cities for whom gross medical marijuana sales figures are obtainable these computations must be regarded as very approximate. To which a bi-annual $500 per dispensary registration fee is next added for an additional total of $11,000. (Note: comparable dispensary permit application fees in other jurisdictions with medical marijuana dispensary ordinances impose application fees as well as annual regulatory fees, e.g. City of Oakland Medical Cannabis Dispensary Permit application fee of $5,000 with an annual permit issuance and non- refundable annual regulatory fee of $60,000.) Finally, a 1 % local sales tax allocation figure may be calculated from the computed $17.7 Million in citywide gross medical marijuana sales, which yields a sales tax allocation of approximately 177 000.5 Rounding down to the nearest $10,000, the combined total of these three revenue sources equals 540 000 for FY 2014-15. This figure will vary from year to year depending on the gross sales of medical marijuana dispensaries and taking into account the bi-annual nature of the underlying medical marijuana dispensary registration fee. 4 By comparison the City of Oakland's Business Tax Ordinance imposes 5% gross receipts Cannabis Business License Tax Rate. s Beginning October 2005 the California State Board of Equalization began to issue sales tax seller's permits for the sale of medical marijuana. As the sale of medical marijuana by a medical marijuana dispensary does not generally meet all of the criteria for the exclusion provided by the BOE for the sale of medicines or medical devices (BOE Regulation 1591) medical dispensary marijuana sales may be deemed as being subject to the Santa Ana California sales tax, currently 8% with 1% allocable to Santa Ana. See generally: (BOE Special Notice - Information on Sales Tax and Registration for Medical Marijuana Sellers). 21 65A-27