City voters approved Measure F – the Cannabis Business Tax – in November 2016, which set up a taxing mechanism for retail cannabis sales. In order to tax the recently-opened testing facility, the city had to establish a development agreement with the company. With more businesses interested in potentially expanding operations in the city, officials are considering expanding the ordinance – a move that would ultimately require voter approval. 

“In the current Measure F that was passed, there are some gaps that are not accounted for in some of the kind of cannabis-related industries that we permit but don’t have a taxing method for,” said city manager Marti Brown. “This proposal would allow us to capture that additional tax revenue for business like cannabis labs, volatile extraction and edible manufacturing.” 

According to a resolution being considered at tonight’s meeting, City Council members want to amend and modernize the current cannabis tax ordinance to impose a tax on new cannabis activities and to update current language in the ordinance in order to impose the license tax on both cannabis and hemp businesses. 

Under the proposed changes, retail outfits would be taxed 6 percent of gross receipts; manufacturing and processing would be taxed 4 percent of gross receipts; distribution would be taxed 3 percent of gross receipts; testing labs would be taxed 2.5 percent of gross receipts; and indoor cultivation activities would be required to pay up to $10 per canopy square foot of cultivation (adjustable for inflation).

The way Measure F is currently formatted, retail sites could be taxed as high as 15 percent of gross receipts. Brown said under the proposal, that cap would be lowered down to 6 percent in order to make it more consistent and hopefully generate greater interest from businesses.

If the resolution is passed, the proposed changes would go before voters as a ballot measure in the Nov. 3 election. The proposed ballot question states that the tax has the potential to generate up to $470,000 annual for the city and would be used for general municipal expenses such as police, fire, roads and recreation.

City Council members will hold a public hearing and discuss the proposed revisions to the city’s ordinance at tonight’s meeting at 5 p.m. Due to the ongoing public health emergency, the meeting will be closed to the public. The city plans to stream the meeting live online at https://zoom.us/j/144184007. To listen to the meeting via telephone, call 1-699-900-9128 and enter Zoom Meeting ID: 144 184 007.