Pubdate: Thu, 14 Jul 2016
Source: Press Democrat, The (Santa Rosa, CA)
Copyright: 2016 The Press Democrat
Contact:  http://www.pressdemocrat.com/
Details: http://www.mapinc.org/media/348
Author: Clark Mason

CLOVERDALE SEEKS TO JOIN GROWING NUMBER OF CALIFORNIA CITIES TAXING MARIJUANA

With medicinal marijuana becoming more regulated and the possibility 
that California voters will legalize pot in November, Cloverdale is 
pursuing a local tax on cannabis-related businesses.

A majority of Cloverdale voters would need to approve the tax, which 
the City Council is likely to place on the November ballot.

Mayor Mary Ann Brigham said there is no shortage of people wanting to 
set up dispensaries or other cannabis businesses in Cloverdale, and 
it makes sense for the city to tax them.

"Definitely the green revolution has hit Northern California hard," 
she said. "We all know that it exists here and that it's a pretty big 
part of our economy."

Besides Cloverdale, a number of cities in California are moving ahead 
with November ballot measures to tax marijuana, including Santa 
Barbara, Grover Beach in San Luis Obispo County and Fillmore in Ventura County.

Currently, there are at least 18 California cities with commercial 
marijuana taxes on the books that can be collected in addition to state taxes.

Some cities tax dispensaries only, while others also tax cultivation 
operations.

Sacramento, which has more than 30 dispensaries, generates more than 
$2.8 million in revenue from its 4 percent commercial marijuana tax 
on gross receipts, according to figures compiled by Cloverdale 
officials. Palm Springs, with about a half-dozen dispensaries, 
collects an estimated $1 million with its 10 to 15 percent variable tax.

And Shasta Lake, with only two dispensaries, generates at least 
$175,000 with a 6 percent tax.

Cloverdale officials are considering a tax measure with a maximum of 
15 percent on dispensary sales, cultivation, distribution, delivery 
and testing businesses. But the tax might be lower with a sliding 
scale depending on the type of business.

City officials say they want to avoid taxes that are onerous.

"There is a general concern being expressed that if state and local 
jurisdictions get too aggressive in taxing, it would continue as a 
black market," said City Manager Paul Cayler.

At the last City Council meeting, growers said they were willing to 
pay taxes and legitimize their operations.

"The people in the industry are more than ready to pay their share 
for being able to conduct business in the town and contribute to the 
city," said Oliver Schraner, a Cloverdale resident who described 
himself as a grower and member of the Small Farmers Association. "We 
want to do the right thing. We want to step out into the light."

Patrick King, a cannabis advocate who owns Soil King Garden Center, 
urged the City Council to place the taxation measure on the ballot as 
soon as possible, although he said it should be a maximum 5 percent tax.

"It's important to get something on the ballot now," he said, because 
it will generate revenue and the tax may be less than what a future 
council would ask voters to impose.

King said Tuesday licenses for cannabis distribution should go to 
local residents to protect the small farmer, "keep it local and 
community oriented."

The city still had not determined the number of businesses that will 
be licensed, and the conditions placed on them.

The discussion in Cloverdale has evolved from eight years ago when 
the city banned marijuana dispensaries. It was only in January that 
the city lifted a prohibition on outdoor cultivation for medical 
marijuana, making an exception for patients to grow a few plants outside.

Any type of commercial marijuana or commercial medical marijuana 
activity remains prohibited. But that is unlikely to last.

"It looks like we'll allow a couple of dispensaries to go in," said 
Mayor Brigham, adding that it's still to be determined whether they 
would go downtown, or in a commercial area.

"The general consensus of the council I think is times are changing 
and if they are, they are going to move toward reform of cannabis 
rules in Cloverdale," Cayler said.

The pressure for change is gaining momentum with Proposition 64, the 
Adult Use of Marijuana Act that recently qualified for the statewide 
November ballot. It would allow for recreational use, something polls 
show has a strong likelihood of passage.

If the California proposal passes, sales of recreational marijuana 
could begin as soon as Jan. 1, 2018 and raise an estimated $1 billion 
annually for the state.

Sales of both recreational pot and medical marijuana initially would 
be subject to a 15 percent state excise tax. But cities and counties 
would retain the right to prohibit pot-related businesses and to 
impose their own fees and taxes.

The measure sets up a comprehensive system governing marijuana 
businesses at the state level and allows local governments to 
regulate marijuana-related activities and subject the businesses to 
zoning and permitting requirements. But marijuana businesses still 
could be banned by a vote of the people within a locality.

Brigham said she is hearing primarily from people who are 
pro-legalization, who want the city to regulate and tax cannabis businesses.

But she said there are others who take a less benign view and still 
see it as a drug akin to heroin.

"I would really like to get feedback from the public in Cloverdale on 
how they feel about this," she said.

The council is scheduled to discuss more specifics of the measure on 
July 26 before preparing to officially put it on the ballot at its 
Aug. 9 meeting.
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MAP posted-by: Jay Bergstrom