As many Orange County cities look to patch holes in bleeding budgets ravaged by drastic dips in sales tax revenues due to Coronavirus-mandated closures, many city halls are starting to take another look at cannabis sales. 

Editor’s Note: As Orange County’s only nonprofit & nonpartisan newsroom, Voice of OC brings you the best, most comprehensive local Coronavirus news absolutely free. No ads, no paywalls. We need your help. Please, click here to make a tax-deductible donation today to support your local news.

Fullerton, La Habra and Stanton are possibly looking to join Santa Ana in creating new revenue streams — while Costa Mesa in April grappled with keeping business in the city  by lowering its city cannabis tax to one percent. 

“When you look at COVID, the pandemic has had some immediate and real consequences for our budget, we expected to end the fiscal year with roughly $1.6 million surplus revenue over expenditures. But when COVID-19 hit in the past eight weeks, we’ve seen that number going to $800,000 in the red — a two-and-a-half million swing right there,” said La Habra City Manager Rob Ferrier. 

Santa Ana’s cannabis shops are estimated to bring nearly $11 million to the city’s general fund, according to the proposed 2020-2021 budget. The city’s general fund is facing a $19 million shortfall this upcoming fiscal year. 

While the city’s Finance Director Kathryn Downs in a May 21 video call said cannabis revenue comprises a small slice of the city’s hundred-million-dollar budget, it’s still money that’s going directly to youth services and last year helped fund aquatics programs at city pools.

“Cannabis tax revenue is one of several currently stable revenue streams, along with Utility Users’ Tax, Jail Revenue and Property Tax. Though the amount collected for cannabis is less than the others,” Downs said in a later statement through a city spokesperson.

Costa Mesa Mayor Katrina Foley said licensing and taxing dispensaries will help counter the unlicensed shops in the city. 

“I’m just looking at it like, this is one tool in our box to diversify our revenue stream — our ad hoc committee is recommending we move forward with it on the ballot — and we think it will also serve not just as a revenue source, but help us manage the rogue dispensaries in our city,” Foley said. 

The Costa Mesa City Council voted mid-March to lower the tax rate, before the economic fallout caused by the novel coronavirus business shutdowns. The city is facing a nearly $30 million deficit this upcoming fiscal year, according to staff estimates.  

In Stanton, city officials have smoothed out a system for implementing a cannabis tax, but the City Council hasn’t voted on the tax measure to put it in place yet, according to City Manager Jarad Hildenbrand in a May 21 phone interview. 

“It’s hard to estimate what we would generate right now. When we were working on putting the measure together, we were factoring cultivation , manufacturing – we thought it would generate between $1 million to $1.4 million annually, running pre-COVID-19,” Hildenbrand said. 


Leave a Reply