A “Yes” vote approves commercial cannabis operation taxes.
City of Morro BayMeasure D-18 Ordinance - Majority Approval Required
City of Morro Bay
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Shall the measure, known as the CANNABIS TAX, imposing maximum tax of ten cents per $1 of proceeds of commercial cannabis operations, annual maximum tax of $25 per square foot of commercial cultivation area (CPI adjustments), no sunset clause, estimated $25,000 to $225,000 annual collections on currently allowed operations, revenue available for unrestricted general revenue purposes, be adopted?
What is this proposal?
Details — Official information
YES vote means
NO vote means
A “No” vote disapproves commercial cannabis operation taxes
Impartial analysis / Proposal
Joseph W. Pannone Morro Bay City Attorney
Measure D-18 was placed on the November 6, 2018 General Municipal Election Ballot by the Morro Bay City Council. If approved, then the measure adopts a new Chapter 3.70 (“Cannabis Tax”) for the Morro Bay Municipal Code to authorize a tax on current and future commercial cannabis operations in the City of Morro Bay. Rough estimates on tax revenue to be generated from currently authorized commercial cannabis operations are anywhere from $25,000 to $225,000. The revenue will be deposited into the City’s General Fund and available for general City purposes, as determined by the City Council.
Measure D-18 is a tax proposal and does not address whether commercial cannabis operations should locate in the City. State law currently allows limited personal cannabis use, possession and cultivation, as well as cannabis businesses in cities that permit them. Morro Bay Ordinance 612 currently provides for a commercial cannabis operations regulatory program, which allows and regulates up to two medical cannabis retail operations and an unlimited number of wholesale medical cannabis distribution operations and medical cannabis deliveries.
Measure D-18 imposes a maximum cannabis tax of no more than 10% of the proceeds of all commercial cannabis operations, and a maximum cannabis tax of no more than $25 per square foot of commercial cannabis cultivation (with annual adjustment of the cultivation tax upwards based on the consumer price index). The Council will have the authority to set the tax rates within those maximums. The taxes are not sales or use taxes and shall not be calculated or assessed as such. The taxes shall not be separately identified or otherwise specifically assessed or charged to any individual, consumer or customer. The taxes are imposed upon the commercial cannabis operation. A “commercial cannabis operation” includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery, or sale (including retail and wholesale) of cannabis and cannabis products; except, as applicable, for personal cannabis cultivation. “Proceeds” means total revenue and/or money received through the sale of goods and/or services before any deductions or allowances (e.g., rent, cost of goods sold, taxes).
The administrative and operational aspects of the Cannabis Tax are subject to amendment by the Council to further its purposes and intent. The Finance Director is authorized to implement and administer the Cannabis Tax, which also provides penalties and interest for late payments, with a maximum penalty of 25% of the tax due for late payments, and a maximum 10% interest rate on late payments. Measure D-18 provides the Council authority to lower those rates.
Measure D-18 requires approval by a majority of voters. A “Yes” vote approves commercial cannabis operation taxes. A “No” vote disapproves them.
Published Arguments — Arguments for and against
Arguments FOR
Measure D-18 will ensure that commercial cannabis businesses operating in the City of Morro Bay will pay their fair share of taxes. These types of businesses must help fund general municipal services, such as police, fire and code enforcement that are necessary for the proper administration and monitoring of their activity.
The imposition of a local excise tax on cannabis businesses will produce an estimated $25,000 to $250,000 annually for the General Fund, and it is anticipated that this tax revenue will grow over time as revenues increase.
When added to State-mandated taxes, the cumulative rate should generate enough revenue to cover necessary City regulatory costs without being so high as to encourage illegal sales.
Measure D-18 is fiscally responsible, timely, and prudent. It will ensure that commercial cannabis businesses contribute to the City’s costs associated with licensing and regulating these businesses. On behalf of the Morro Bay City Council, we respectfully request a “Yes” vote on Measure D-18.
s/ Marlys McPherson, Mayor Pro-Tem
s/ Robert “Red” Davis, City Councilmember
Arguments AGAINST
NO ARGUMENT AGAINST MEASURE D-18 WAS SUBMITTED
Read the proposed legislation
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