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March 7, 2017 — Local Elections
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An Initiative Measure to Tax Medical marijuana Facilities in the CityInitiative Statute

Local
March 7, 2017Local Elections

City of Signal Hill
Measure F Initiative Statute - Majority Approval Required

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Shall the proposed citizen’s initiative measure to tax medical marijuana facilities in the City of Signal Hill, through a 10% tax on the monetary transactions as well as doubling the license taxes, with no sunset clause, and currently estimated to raise $0.00 annually because medical marijuana facilities are not presently allowed in the City of Signal Hill, be adopted?

Summary

This initiative measure seeks to impose increased business license tax and a 10% tax on transactions at facilities that engage in planting, cultivating, harvesting, transporting, dispensing, delivering, selling at retail or wholesale, manufacturing, compounding, converting, processing, preparing, storing, packaging or testing marijuana (“Medical Marijuana Facilities” or “Facilities”).

Currently, Medical Marijuana Facilities are not permitted to operate anywhere in the City of Signal Hill. The measure would not make such facilities legal in the City, but instead would impose taxes in the event such facilities ever become legal.

The measure requires Medical Marijuana Facilities to pay double the annual business license tax of other businesses in the City. It requires that 25% of the annual business license tax paid by such Facilities must be directed for use by the Signal Hill Police Department, and that another 25% be directed for use by the Long Beach Unified School District for schools located in the City of Signal Hill.

 

The measure also requires that 10% of the dollar amount of each transaction at Medical Marijuana Facilities must be transmitted to the City. The City must use the funds as follows: 50% to the City’s General Fund; 25% to the Police Department; and 25% to the Long Beach Unified School District for use in Signal Hill schools. No financial analysis has been performed to determine the amount of revenue projected for these uses or of auditing or enforcement costs.

— City Clerk of the City of Signal Hill

Impartial analysis / Proposal

Measure F imposes taxes on Medical Marijuana Facilities in the City of Signal Hill. Medical Marijuana Facilities are broadly defined as any enterprise involving marijuana activities such as cultivation, delivery, sales, manufacturing and testing of marijuana. Measure F was placed on the ballot by a petition signed by the requisite number of voters.

The City does not currently allow Medical Marijuana Facilities, and Measure F does not allow them. If Measure F is approved, therefore, it is currently estimated to raise $0.00 annually. No economic analysis was conducted by the City as to potential future revenue generated if Medical Marijuana Facilities were allowed in the City.

Measure F imposes a 10% tax on monetary transactions between Medical Marijuana Facilities and medical marijuana customers / caregivers. This tax does not appear to be a sales tax, because sales taxes are payable to the Board of Equalization, whereas this tax is payable to the City of Signal Hill. Measure F double s the normal City license tax which would otherwise be paid by Medical Marijuana Facilities (adding approximately $50 to the existing license tax).

While 50% of the taxes are for the City’s general purposes, 25% of tax revenue is for exclusive use of the Signal Hill Police Department and another 25% of tax revenue is for exclusive use of City of Signal Hill schools in the Long Beach Unified School District. The law is unclear whether a ballot measure approved by the voters of the City can bind the use of funds by the Long Beach Unified School District.

Under Proposition 218 a tax can be used for a general purpose, or for a special purpose. Measure F requires half of the revenue to be used for specific purposes of law enforcement and schools. Therefore, Measure F appears to be a special tax because all of its revenue is not made available for expenditure for any and all governmental purposes. Special taxes need two-thirds approval for passage; general taxes need majority approval for passage. (Cal. Const. art. 13C, §§ 1-2.). 

Proposition 64 (Adult Use of Marijuana Act) is on the statewide November 8, 2016 ballot and proposes to generally legalize nonmedical marijuana statewide (with certain restrictions and some local control). Measure F provides its provisions shall be read consistent with any statewide legalization of marijuana for adult use.

The above statement is an impartial analysis of Measure F. If you desire a copy of the ordinance or measure, please call the election official’s office at (562) 989-7305 and a copy will be mailed to you at no cost.

— City Attorney for City of Signal Hill

Arguments AGAINST

Why should you vote No on Measure F? Measure F is a medical marijuana transaction tax and fee, but there is nothing to tax because medical marijuana facilities are not allowed to operate in Signal Hill. Measure F does not approve these types of businesses. Measure F was written by an outside group with no connection to Signal Hill. No study was done to show how much money it will cost the City to run the tax and fee program or prove how much money could be made from the tax. Responsible tax measures require an independent oversight board or committee. Measure F does not require independent oversight of tax spending. Measure F will not bring money to schools, police, or city programs or to cover the cost to the City to set up and administer the tax and fee program. Measure F does not make sense.

— City of Signal Hill City Clerk

Proposed legislation

SIGNAL HILL MEDICAL CANNABIS FACILITIES FEE ACT OF 2016

The People of the City of Signal Hill do ordain as follows:

SECTION 1. TITLE

This initiative shall be known as and may be cited as the Signal Hill Medical Cannabis Facilities Fee Act of 2016.

SECTION 2. FINDINGS AND DECLARATIONS

The people of the City of Signal Hill find all of the following to be true:

A.                 We strongly support the right of seriously ill patients to use medical Cannabis in the treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraines, or any other serious illness or condition for which Cannabis provides relief.

B.                 We oppose the arrest, prosecution, and incarceration of persons legally-qualified under the Compassionate Use Act of 1996, codified as California Health & Safety Code Section 11362.5 and enacted through Proposition 215, and the Medical Marijuana Program Act of 2004, as amended, codified as California Health & Safety Code Sections 11362.7 through 11362.83, inclusive, and enacted through Senate Bill 420, by local, state, or federal law enforcement.

C.                 The provision of medical Cannabis should occur in a safe and orderly manner in order to protect patients and the community. In the absence of clear guidelines, there has been a lack of consistency in the permitting and regulation of medical Cannabis dispensing.

D.                 The people of the City of Signal Hill further find and declare that we enact this initiative pursuant to the powers reserved to the State of California, the City of Signal Hill, and its people under the Tenth Amendment to the United States Constitution.

SECTION 3. AMENDMENTS TO TITLE 5 OF THE SIGNAL HILL MUNICIPAL CODE

Chapter 5.04, entitled, "General Licensing Provisions and Taxes," of Title 5, entitled "Business Taxes, Licenses, and Regulations," of the Signal Hill Municipal Code is amended to add the following sections which shall read as follows:

 

Section 5.04.135. Exemption not applicable to Medical Cannabis Facilities.

Notwithstanding the requirement that all Medical Cannabis Facilities and Medical Cannabis Collectives operate as nonprofits, as required by California Health & Safety Code section 11362.765, the exemption applicable to nonprofit enterprises contained in Section 5.04.130 shall not apply to Medical Cannabis Facilities.

For the purposes of this Section, "Medical Cannabis Facilities" shall mean any activity that involves, but is not limited to planting, cultivating, harvesting, transporting, dispensing, delivering, selling at retail or wholesale, manufacturing, compounding, converting, processing, preparing, storing, packaging or testing, any part of the plant cannabis sativa L, or any of its derivatives.

Section 5.04.485. Medical Cannabis Facilities.

Every person who in this city engages in a business operating a Medical Cannabis Facility shall pay an annual license tax which shall be in the same amount and computed in the same manner as the annual license tax specified in Section 5.04.550, except that (a) the dollar amounts in Section 5.04.550 shall be increased 200%, (b) 25% of the annual license tax shall be directed exclusively for the use by the Signal Hill Police Department, and (c) 25% of the annual license tax shall be directed exclusively for the use by the Long Beach Unified School District for schools located in the City of Signal Hill.

For the purposes of this Section, "Medical Cannabis Facilities" shall mean any activity that involves, but is not limited to planting, cultivating, harvesting, transporting, dispensing, delivering, selling at retail or wholesale, manufacturing, compounding, converting, processing, preparing, storing, packaging or testing, any part of the plant cannabis sativa L, or any of its derivatives.

Section 5.04.486. Medical cannabis transaction fees.

Every monetary transaction between a Medical Cannabis Facility and a Qualified Patient or Primary Caregiver shall be subject to a fee of ten percent (10%) of the total amount of the transaction. It shall be the responsibility of the individual who obtained the business license on behalf of the Medical Cannabis Facility to collect, record, and submit the City of Signal Hill all such transaction fees. All transaction fees shall be reported and paid to the City of Signal Hill not less than every 90 days after the issuance of the business license to the Medical Cannabis Facility. All transaction fees collected by the City of Signal Hill shall be directed as follows: (a) 50% to the City of Signal Hill's general fund, (b) 25% exclusively to the Signal Hill Police Department, and (c) 25% exclusively to the Long Beach Unified School District for use in schools located in the City of Signal Hill.

For the purposes of this Section, "Medical Cannabis Facility" shall mean any activity that involves, but is not limited to planting, cultivating, harvesting, transporting, dispensing, delivering, selling at retail or wholesale, manufacturing, compounding, converting, processing, preparing, storing, packaging or testing, any part of the plant cannabis sativa L, or any of its derivatives.

SECTION 4. SPECIAL OR REGULAR ELECTION

The Voters of the City of Signal Hill hereby expressly request that this initiative ordinance be set for a special or regular election at the earliest time allowable by law.

SECTION 5. SEVERABILITY

If any provision of this initiative, or the application thereof to any person or circumstance, is held invalid, that invalidity shall not affect any other provision or application of this initiative that can be given without the invalid provision or application; and to this end, the provisions or applications of this initiative are severable.

SECTION 6. MODIFICATION, REPEAL, OR AMENDMENT.

The City Council may not repeal this initiative if it becomes law, or amend it in any manner, without further voter approval.

SECTION 7. STATEWIDE REGULATION.

This initiative, and the provisions herein, shall be read consistent with any statewide regulation of Medical Marijuana or legalization of Marijuana for adult use that is promulgated by the legislature or by voter approval in the future.

SECTION 8. EFFECTIVE DATE.

The provisions of this measure shall go into effect at the earliest time allowable by law after election results approving this law's enactment by the voters.

SECTION 9. LEGAL DEFENSE

 

The People of Signal Hill desire that the Act, if approved by the voters, and thereafter challenged in court, be defended by the City of Signal Hill.

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