MILPITAS — Despite voting in late 2018 to ban marijuana businesses in the city, the Milpitas City Council will discuss Tuesday whether it should put a marijuana business sales tax measure on the November election ballot.
The issue of whether to sanction marijuana business in the city has been contentious.
Mayor Rich Tran, who supported the previous ban, suggested at an April 21 meeting that the council take up the conversation on the cannabis sales tax measure, saying he wants local voters to make the choice.
“I believe this proposed cannabis sales tax is one step that we can take from now until the first Tuesday in November to allow residents to exercise their freedom to choose,” he said.
Councilman Anthony Phan, who had proposed a cannabis business sales tax measure in the summer of 2018 that was later shot down by the council, said he supported discussing the idea again.
“Having a diverse revenue stream is always good for us, especially in the fiscal position that we are in and the fiscal position that we will inevitably be in,” he said.
However, it’s unclear if moving forward with a cannabis business sales tax ballot measure would get support from the council, given that the city currently bans all of those businesses.
“In order for a tax to be levied on cannabis establishments, the city will need to also allow the use of cannabis establishments, either through council action or through voter approval,” a city staff report said.
“If it is determined that voters should decide whether to allow cannabis establishments in the city and how to tax them, two separate measures will need to be placed on the ballot,” the report said.
After Tran suggested at the April 21 meeting that the proposal be discussed at a future meeting, Councilwoman Karina Dominguez asked Phan if he is a lobbyist for the marijuana industry, and then continued to ask the city attorney if there is a conflict of interest “since (Phan) is a lobbyist and that’s what he does.”
Phan firmly denied that claim.
“I am not a lobbyist for the marijuana industry and I will take legal action to dispel those rumors if they are brought up again. That is pure libel,” he said.
Phan previously recused himself on past cannabis votes “out of an abundance of caution” because he was a contractor at the time for a consulting company that does some business with cannabis companies, but he was later cleared of any potential conflict in a letter from the state’s Fair Political Practices Commission.
He mentioned the letter at the April 21 meeting, but Dominguez said because she had not seen it yet, she was still opposed to discussing the sales tax measure because it would not be “transparent.”
Phan retorted, “You’ll hear from my lawyer.”
After denying Phan’s cannabis sales tax measure in August 2018, the council then considered a recommendation from staff and the council’s subcommittee on cannabis that could have allowed up to 10 such businesses to operate in the city.
But after hearing from hundreds of people who spoke against it at a meeting in November, wrote to the council, or signed online petitions, the council ultimately moved to ban all marijuana businesses.
Many people opposed to the idea of cannabis businesses in the city wore T-shirts and held signs at past meetings, and claimed cannabis businesses would worsen air quality and pot would lead users to harder drugs.
“So please keep marijuana, or cannabis out of here. Keep it far away from here,” one man said at a meeting in December 2018.
Some people supporting the idea of cannabis businesses in the city accused those opposed to it of using “fear-mongering” and “outdated ideas” to make their point, instead of facts.
Although California voters legalized recreational marijuana by passing Proposition 64 in November 2016, the law allows cities to regulate it within their own boundaries. In Milpitas, the initiative was supported by 51.2 percent of the vote.
The council also will discuss on Tuesday the prospect of placing a general sales tax ballot measure of a quarter-cent on the November ballot.
The city staff is recommending the council hold off on both measures, because of the short time frame available to do polling and other upfront work, and because of the coronavirus pandemic.
“Placing the measures on the November 2020 (ballot) does not appear to be feasible, unless it is determined that they should proceed with very limited additional analysis and outreach,” the staff report said.
The estimated costs for preparing and researching the two sales tax measures are estimated around $90,000, the city staff report said, plus $60,000 to place two measures on the general election ballot.
The Milpitas City Council virtual meeting is scheduled to begin at 7 p.m. on Tuesday, May 5, 2020. It will be live streamed on the city’s official website, as well as its Facebook and YouTube pages.