55D - RESO - MEDICAL MARIJUANA REGULATION

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Medical Marijuana Ballot Initiative June 17, 2014 Page 3 Update the Business License Tax Code (Chapter 21) to require a 5% gross receipts cannabis tax, as well as initial registration fees and annual regulatory fees to account for the costs associated with regulating these businesses. Require a Conditional Use Permit which will include public noticing and a hearing before the Planning Commission with confirmation by the City Council. • Background checks on all managers, employees and volunteers working at a medical marijuana collective /000perative. At the meeting on June 3, 2014, the City Council expressed interest in options regarding the separation distance between medical marijuana collectives /cooperatives. The proposed 1,000 foot requirement is intended to prevent the overconcentration of medical marijuana collectives /cooperatives in a given area. Should the City Council decide to reduce this requirement to 700 -800 feet, one potential result will be to increase the overall number of facilities that may be located in a given area. The resulting increase in the number of collectives /cooperatives that a reduction would create depends on where a facility is located in relation to other collectives /cooperatives. Fiscal implications of Proposed City Initiative The method proposed as part of the Santa Ana Medical Marijuana Regulation and Limitation Initiative is to charge collectives a 5% gross receipts Business License Tax, with provisions to allow the City Council to raise this rate by ordinance to as high as 10 %. In addition to the gross receipts tax, a $2,000 minimum base tax, regulatory fees for the required conditional use permit and annual compliance inspection and state sales tax will also be required. The revenue generated by these fees /taxes will be used to cover the costs associated with the enforcement of the proposed ordinance as well as to address the secondary and tertiary effects of medical marijuana businesses. A complete list of the proposed changes to the Business License Tax Code (Chapter 21) is provided as exhibit 2. The proposed revisions to the Business License Tax Code (Chapter 21) 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 proposed taxing and regulatory methods described in exhibit 2, the projected annual revenue from medical marijuana collectives /cooperatives would be approximately $1,248,396 per year (Exhibit 3). This estimate assumes a total of twelve collectives /cooperatives, each with annual gross sales of $1.5 million dollars. Should there be less than the maximum of twelve collectives, or should gross sales not reach the estimated $1.5 million dollars, the revenue received will be less than projected. California Environmental Quality Act CEQA) Analysis The California Resources Code states that voter initiatives not sponsored by a public agency do not constitute a "project" pursuant to CEQA and, as such, they are exempt from environmental review (Public Resources Code Section 15378(b)(3)). The collective- backed voter initiative, 55D -3