TITLE
Recommendation to request City Manager to prepare a report exploring the feasibility of reducing the City’s adult-use cannabis retail tax rate to align with the medicinal cannabis retail tax rate within 90 days, and submit the findings to the Budget Oversight Committee and then the Economic Development and Finance Committee for discussion.
DISCUSSION
In 2016, Measure MA established a framework of adult-use and medicinal cannabis business tax rates to fund the cost of regulating the cannabis industry and provide additional financial resources for city services related to public safety, 9-1-1 emergency response capabilities, and homelessness assistance programs. At that time, Measure MA was estimated to generate approximately $13 million annually.
Among the taxes established, Measure MA set the tax rate for dispensaries at 6% for medicinal cannabis sales and 8% for recreational (adult-use) cannabis sales at the establishment. Per Municipal Code Chapter 5.92.030:
"Dispensary" means any person, entity, or operation, in whole or in part, whether operating for-profit or not-for-profit, and all associated owners, employees, managers, or agents engaged in both medicinal and adult-use commercial cannabis activity from the same permitted premises for the retail sale and delivery of cannabis goods to customers. A "Dispensary," as that term is used in this Code, is a "Retailer" under the MAUCRSA.
The table below shows revenues received from Measure MA for all cannabis business activities since its enactment. As the number of legal cannabis businesses operating has increased since 2016, Measure MA revenues have also grown, and the City is now
receiving nearly $13 million in annual revenue, with the largest source of revenue being the adult-use dispensary sales tax. It is anticipated that revenues will continue to grow as eight additional dispensary licenses will be issued for social equity applicants within the Cannabis Social Equity Program.
FISCAL YEAR ME...
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