Laserfiche WebLink
proposed fees represent the cost of services that are discretionary on the part of the <br />user. To the extent the City does not fully recover its costs for those services, General <br />Fund taxes will be required to offset regulation activity. Tax subsidies for cannabis <br />regulation services will reduce General Fund tax dollars available for City services <br />benefitting the general public. If the related ordinance amendments are adopted on April <br />23, 2018, the fees will become effective on the day the Cannabis Ordinance becomes <br />effective, May 23, 2018. <br />Funding for Drug Education and Prevention Program <br />Based on feedback from health and education partners, staff proposes that cannabis <br />businesses located in Redwood City contribute $10,000 annually to a drug education <br />and prevention program for the Redwood City community. The total amount collected <br />annually would vary depending on the number of businesses operating within Redwood <br />City. <br />Cannabis Business License Tax (Excise Tax) <br />Effective January 1, 2018, all medical and non-medical cannabis retail sales are subject <br />to a 15% state excise tax, in addition to the existing regular state and local sales tax <br />(8.75%). The City is permitted to impose additional excise taxes on facilities that are <br />cultivating, manufacturing, processing, selling, distributing, providing, storing, or <br />donating medical or non-medical cannabis. The Adult Use Marijuana Act prohibits <br />additional state and local sales taxes on medical cannabis when the qualified patient <br />has a State issued medical cannabis card; cannabis cultivated for personal use is <br />exempt from taxation. <br />In order for the City to tax cannabis businesses operating in the City, the City needs to <br />seek voter approval. The earliest that the City could place a tax measure on the ballot <br />is November 2018. Staff is recommending a ballot measure for a cannabis business <br />license tax that is a percent of a business’s gross receipts on medicinal and adult use <br />cannabis. <br />Many cities have adopted a sliding scale percentage, which allows the City to phase in <br />the taxes, have some flexibility in light of an evolving market, and set a tax rate that <br />encourages business compliance. City staff is recommending a sliding scale tax in the <br />range of 4%-10%. The Council would need to place a cannabis business license tax <br />measure on the November 6, 2018 ballot by August 10, 2018. A general tax placed on <br />the November 2018 ballot that coincides with council member elections would require <br />the cannabis business license tax measure to be approved by a simple majority of <br />voters (50% +1). <br />7.B. - Page 12