65B - BALLOT INITIATIVE MEDICAL MARIJUANA COLLECTIVES

Home Browse Search

Medical Marijuana Ballot Initiative June 3, 2014 Page 9 5. Apply the alternate tax of up to one hundred dollars ($100) per square foot on all improvements owned, rented, leased or otherwise occupied or used by medical marijuana collectives /cooperatives engaged in the cultivation /growing of marijuana on such improvements whether for retail sale or whether to supply another marijuana business. The tax shall initially be set at a rate of fifteen dollars ($15) per square foot with provisions to allow the City Council by ordinance to increase this rate as needed up to a maximum rate of one hundred dollars ($100) per square foot to offset the costs associated with the secondary and tertiary effects of medical marijuana businesses. 6. Provide that the "initial gross receipts tax rate' and both the "initial square foot tax rate" and "maximum square foot tax rate" be subject to annual CPI adjustment in the same manner as all other regular business license tax rates and charges under the City's Business License Tax Code to mediate the costs associated with the secondary and tertiary effects of medical marijuana businesses. 7. Add provisions requiring a monthly remittance of business tax rather than quarterly. Medical marijuana collectives /cooperatives typically operate as entirely cash -based enterprises because banks will not offer accounts out of fear of violating federal laws. Accordingly, auditing such operations may prove to be extremely difficult. Requiring a monthly remittance will protect the City from losing out on tax revenue if a collective /cooperative goes out of business prior to the remittance period. This method will also allow the city to more closely monitor the revenues generated by these businesses which may indicate illegal transactions. Each of the recommendations above are consistent with the definitions, rates and taxing methods utilized by other cities in California that currently regulate medical marijuana collectives/ cooperatives. Based on the above taxing assumptions as well as the regulatory assumptions outlined in Option #3, the projected annual revenue from medical marijuana collectives/ cooperatives could be approximately $1,000,000 per year (Exhibit 1). Summary and Recommendation Since enacting an ordinance prohibiting medical marijuana collectives /cooperatives in 2007 the Police Department, Community Preservation Division and City Attorney's Office have faced a constant challenge in both tracking new collectives /cooperatives and working through the necessary legal steps to closing them down. Partnerships with Federal agencies and nearby cities on enforcement have proven successful for short periods of time, but have not been shown to be a viable long -term solution. A City- sponsored competing initiative to permit, but regulate and tax medical marijuana collectives /cooperatives will provide an opportunity for a limited number of medical marijuana businesses to responsibly operate within specified areas of the city. Further, it will allow the City to enforce strict operational standards and to collect both a regulatory fee and business tax to offset the costs associated with enforcement while providing qualified patients with safe access to medicinal marijuana. L•