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8.A. - Page 8 of 15
<br />FISCAL ANALYSIS
<br />HdL has provided a range of preliminary projections based upon certain assumptions and confidential data
<br />collected from cannabis storefront and non -storefront retailers in the Bay Area as well as other market trends.
<br />Based on this data, staff recommends that four to six retailers be permitted to locate in Redwood City. The
<br />table below estimates the potential revenue that could be generated for the City Excise Tax, the 1% City Sales
<br />Tax and Measure RR 0.5% transaction tax for the storefront retailers. It should be noted that staff does not
<br />recommend, at this time, establishing a cannabis tax above the prevailing rate of 4%-6%. A revenue estimate
<br />for a 10% excise tax rate is provided for illustrative purposes since the tax ordinance does authorize the City
<br />Council to increase the rate up to 10%. The City's current cannabis excise tax rate for non -storefront and retail
<br />cannabis sales is 4%.
<br />TABLE 3
<br />Excise Tax
<br />Storefront Retailers
<br />Bradley Burns
<br />Measure
<br />Total Annual Projected
<br />Rate
<br />Projected Revenue
<br />Local Sales Tax (1%)
<br />RR
<br />Revenue
<br />Transaction
<br />Tax (0.5%)
<br />4 Stores
<br />6 Stores
<br />4 Stores
<br />6 Stores
<br />4 to 6
<br />4 Stores
<br />6 Stores
<br />stores
<br />Recommended range — 4-6%
<br />4%
<br />$720,000
<br />$960,000
<br />$180,000
<br />$240,000
<br />$90,000-
<br />$990,000
<br />$1,320,000
<br />$120,000
<br />5%
<br />$900,000
<br />$1,200,000
<br />$180,000
<br />$240,000
<br />$90,000-
<br />$1,170,000
<br />$1,560,000
<br />$120,000
<br />6%
<br />$1,080,000
<br />$1,440,000
<br />$180,000
<br />$240,000
<br />$90,000-
<br />$1,350,000
<br />$1,800,000
<br />$120,000
<br />For illustration purposes - not recommended
<br />10%
<br />$1,800,000
<br />$2,400,000
<br />$180,000
<br />$240,000
<br />$90,000-
<br />$2,070,000
<br />$2,760,000
<br />$120,000
<br />In addition to the revenue that will be generated from the cannabis storefront retailers, the consultant
<br />estimates that the City will also receive approximately $472,500-$652,500 in revenues from the non -
<br />storefront retailers in excise, sales and transaction taxes. Non -storefront retailers also contribute $10,000
<br />each as part of the annual renewal fee that is designated for cannabis drug education for children and
<br />youth. This fee will be collected for the first time in 2021 when non -storefront retailers renew their
<br />license. City staff propose to include the same cannabis drug children and youth education prevention fee
<br />for storefront retailers.
<br />Page 8 of 11
<br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore
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