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Tuesday November 8, 2022 — California General Election
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County

San Diego County
Measure A Ordinance - Majority Approval Required

To learn more about measures, follow the links for each tab in this section. For most screenreaders, you can hit Return or Enter to enter a tab and read the content within.

Election Results

Passed

561,120 votes yes (57.4%)

415,825 votes no (42.6%)

100% of precincts reporting (2,718/2,718).

1,039,169 ballots counted.

Shall the measure to fund general County purposes including but not limited to parks, fire safety, roads, health, and social equity, by taxing cannabis businesses in the unincorporated area on gross receipts at maximum 6% for retail, 3% for distribution, 2% for testing, cultivation at 3% or $10 (inflation adjustable) per canopy square foot, and 4% for other businesses, generating an estimated $2,930,000 to $5,600,000 annually until repealed by voters, be adopted?

What is this proposal?

Pros & Cons — Unbiased explanation with arguments for and against

Information provided by Analysts: Ann LInk & Mary Thompson, League of Women Voters of San Diego & LWV of North County San Diego

The Question

Shall the County of San Diego tax all cannabis businesses that operate in areas of the County that are not part of cities?

The Situation

As a result of recent voter-approved changes to state law, there has been an interest by cannabis businesses to open in the unincorporated area of the County. If such businesses are authorized, they are likely to create demands on County services. In order to regulate cannabis facilities and have adequate funding to provide essential public services, the County proposes a cannabis business tax, with revenues to be deposited in the County’s General Fund. 

As of October 2021, the Board adopted ordinance amendments to allow the five existing cannabis dispensaries to continue operations and expand commercial sales of medicinal and adult-use cannabis. Currently, no new dispensaries or other cannabis operations are permitted under the existing ordinances.

The Proposal

This measure was placed on the ballot by the County Board of Supervisors.  Measure A would:

  • Change the County’s Code of Regulatory Ordinances to create a new tax on all cannabis businesses that operate in the unincorporated area of San Diego County.
  • Allow a maximum gross receipts tax on quarterly retail sales (6%), manufacturing (4%), distribution (3%), cultivation (3% or $10 per canopy space) or testing labs (2%). The tax would be above and beyond state excise and sales and use taxes.       
  • Allow the Board of Supervisors to change the rate of the tax but not repeal the tax or set a rate higher than the maximum amount without voter approval.
  • Levy the tax only on activity conducted in the unincorporated area if a business operates both within the unincorporated area and outside of it.
  • Direct tax revenue for general, not specific, government purposes of the County, including parks, fire safety, roads, health, and social equity. 
  • Provide a tax relief provision in the event of disaster or crop failures of cannabis cultivation.

Fiscal effect

Measure A would generate $2.9 to $5.6 million in revenue annually from the gross receipts of cannabis businesses in the unincorporated area of San Diego County. The County’s estimated net annual costs to administer the tax would be $323,311 and 2.50 additional staff years in the Treasurer-Tax Collector and Auditor & Controller departments. 

If new dispensaries or other cannabis operations beyond the current five existing cannabis dispensaries are brought forward to the Board of Supervisors by the County’s Land Use and Environment Group, the County could make commercial cannabis permits available in the unincorporated area in spring-summer 2024.

Supporters say

  • Measure A is a bipartisan solution to advance a safe, regulated, and legal adult cannabis market in San Diego County, keeping tax revenues within the County to fund parks, fire safety, roads, health, social equity and increased enforcement of illegal cannabis operations 
  • The tax will be paid solely by cannabis businesses in unincorporated communities of the County. The tax will not apply to cannabis businesses in cities and will not be a double tax.

 

Supporters:

Nathan Fletcher, Chair, Board of Supervisors, District 4
Nora Vargas, Vice-Chair, Board of Supervisors, District 1
Terra Lawson-Remer, Member of the Board of Supervisors, District 3 

Opponents say

  • This tax is unfair because it only applies to businesses in unincorporated San Diego County, while the revenue can be used for any unrelated program the County chooses.
  • Since the tax only applies in unincorporated San Diego County, those voters should be the only ones allowed to vote on this measure.

 

Opponents:

Haney Hong, President, San Diego Taxpayers Association
Dianne Jacob, former San Diego County Supervisor 

Details — Official information

YES vote means

A "YES" vote is a vote in favor of establishing a cannabis business tax in the unincorporated area of the County.

NO vote means

A "NO" vote is a vote against establishing a cannabis business tax in the unincorporated area of the County.

Impartial analysis / Proposal

San Diego County Counsel, published by the San Diego County Registrar of Voters

COUNTY COUNSEL IMPARTIAL ANALYSIS

This measure was placed on the ballot by the San Diego County Board of Supervisors ("Board"). If approved by a majority of the voters, this measure will impose a tax on cannabis businesses in the unincorporated area of San Diego County ("County") starting January 1, 2023. This tax would be a general tax, meaning revenue could be used by the County for any general governmental purpose.

The measure gives the Board the authority to set the initial rate of the tax and then increase or decrease it up to the maximum rate listed below for each type of business. 

  • 1) Commercial cannabis cultivation: the Board can choose whether to tax gross receipts at up to 3%, or tax square footage of canopy space. Square footage can be taxed up to the following rates: $10 in a facility that uses exclusively artificial lighting, $7 in a facility that mixes natural and supplemental lighting, $4 in a facility that uses no artificial lighting, and $2 for any nursery. The square footage rate shall be adjusted annually for inflation.
  • 2) Operation of a testing laboratory: up to 2% of gross receipts.
  • 3) Retail sales: up to 6% of gross receipts.
  • 4) Distribution: up to 3% of gross receipts.
  • 5) Manufacturing, processing, or all other types of business: up to 4% of gross receipts.

The Board would have the authority to set varied rates using classifications, sub-classifications, a tiered rate structure, graduated rates, or any other means not prohibited by law, up to the maximum rates above. The Board could tax medicinal cannabis business activities at a different rate. The tax would not apply to personal cultivation or use of cannabis as specified in the measure. If a business operates both within the unincorporated area and outside of it, the tax would apply only to activity conducted in the unincorporated area.

All cannabis businesses operating in the unincorporated area must register with the County annually. This tax would apply regardless of whether a business is operating lawfully. The tax shall be paid in arrears on a quarterly basis, and penalties and interest shall be imposed for late payments. The measure contains provisions for possible relief from taxes in the event of disaster or crop failure, as specified. The County Treasurer-Tax Collector will administer the tax and has some discretionary authority in that regard. The County Treasurer-Tax Collector may conduct inspections and audits. A commercial cannabis permit may be revoked for specified non-compliance. Further details about the tax are contained in the full text of the measure.

The tax cannot be increased beyond the maximum amounts listed above without voter approval. If the voters approve the measure, it will become effective 10 days after the Board declares the election results.

A "YES" vote is a vote in favor of establishing a cannabis business tax in the unincorporated area of the County.

A "NO" vote is a vote against establishing a cannabis business tax in the unincorporated area of the County.

 

PDF

Financial effect

Source: San Diego County Auditor & Controller, published by the San Diego County Registrar of Voters

FISCAL IMPACT STATEMENT BY COUNTY AUDITOR AND CONTROLLER

The passage of this measure would allow for the taxation of medical and non-medical cannabis businesses operating within the unincorporated area of the County of San Diego (“County”). Different tax rates would apply to the gross receipts or square footage related to cannabis operations, depending on the business type. The business types and the respective maximum tax rates on their operations are as follows: Cultivation up to $10 per square foot of canopy space, with the actual rate depending on the type of facility, or up to 3% of gross receipts; Testing Laboratory up to 2% of gross receipts; all Retail Sales, including a Retail Dispensary, Retail Delivery, or Microbusiness up to 6% of gross receipts; Distributor up to 3% of gross receipts; Manufacturing/Processing, and any other type of cannabis business not described above, up to 4% of gross receipts. The tax revenue generated would be available for general governmental purposes. The Cannabis Business Tax, if approved by voters, is operative beginning January 1, 2023, pending action by the County Board of Supervisors (“Board”) to set the initial tax rates. The Board has the authority to increase or decrease the tax rates, subject to the maximums established by this measure.

Fiscal impacts associated with this measure include increased unrestricted General Fund revenue from the cannabis business tax paid to the County and increased General Fund expenditures for costs related to tax collection, auditing, accounting, and administration. These revenues and costs are dependent on several unpredictable variable factors, making them difficult to project. These factors include policy decisions by the Board, the number, type, and size of cannabis businesses operating in the unincorporated area of County, consumer demand for cannabis, competition from cannabis businesses located in other jurisdictions, the market price of cannabis, and the compliance of participating businesses. All these factors may change over time.

Based on a consultant’s study of the commercial cannabis industry in the County, estimated revenues from the cannabis business tax in the future could potentially range from approximately $2.9 million to approximately $5.6 million annually. This estimate considers anticipated consumer demand and cannabis business revenue, as well as a range of both market price and production estimates. Actual General Fund revenues may be significantly different depending on the variable factors noted above. While the actual costs are also uncertain, the County anticipates costs of $323,311, which includes 2.5 additional fulltime positions related to tax collection, auditing, accounting, and administration ($191,311), a one-time update to systems used for collections ($50,000), and contracts with external entities for auditing services and cannabis industry data access ($82,000). These costs would be funded by general County revenues.

 

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Published Arguments — Arguments for and against

Arguments FOR

Arguments are the opinions of the authors, and have not been checked for accuracy by any official agency. 

 

ARGUMENT IN FAVOR OF MEASURE A

In 2016, San Diego County voters overwhelmingly legalized the sale and consumption of cannabis for adults under Proposition 64. Since that time, many cities have taken steps to allow for and regulate cannabis businesses, including the cities of San Diego, La Mesa, Lemon Grove, Vista, Oceanside, and now, unincorporated San Diego County. San Diego County is taking a comprehensive approach to cannabis that advances a safe, regulated, and legal adult cannabis market and promotes social equity.

Measure A would impose a tax on cannabis businesses in the unincorporated regions of San Diego County. The tax is not a sales or use tax on cannabis users. The taxes will be paid solely by cannabis businesses, including retail businesses. These tax revenues will stay within San Diego County to fund general County purposes, including but not limited to, parks, fire safety, roads, health, social equity, and increased enforcement of illegal cannabis operations.

This tax will be paid for by businesses in unincorporated communities such as Ramona, Lakeside, and Fallbrook, even though all San Diego County voters are asked to weigh in. It will not apply to cannabis businesses in cities and will not be a double tax.

Measure A is fiscally responsible. By imposing a tax on cannabis businesses, the County's budget will be protected from any new costs associated with cannabis regulation, and protect resources for investment in our communities, public health, and social equity programs. Additionally, implementing this tax will be important to preserve the County's resources so that it can continue to fight against illicit cannabis businesses that have proliferated in many of our communities.

Measure A is a bipartisan solution to advance a safe, regulated, and legal adult cannabis market in San Diego County. These Supervisors urge you to vote yes.

/s/

NATHAN FLETCHER
Chair of Board of Supervisors

NORA E. VARGAS
Vice Chair of Board of Supervisors

TERRA LAWSON-REMER
Supervisor

 

PDF

— PDFs provided by the San Diego County Registrar of Voters

Arguments AGAINST

Arguments are the opinions of the authors, and have not been checked for accuracy by any official agency. 

 

ARGUMENT AGAINST MEASURE A

Vote NO on Measure A!

Decided on by all, yet paid by only some.

If you live in the backcountry or other unincorporated areas, you're going to pay this tax, and it's going to go to support everyone else. Don't pay for an unfair tax when the proceeds WILL LEAVE your community.

If you don't live in the unincorporated county, wouldn't you hate it if someone taxed you but didn't promise to keep the money in your neighborhood? Remember the GOLDEN RULE: do unto others as you would have them do unto you!

The San Diego County Cannabis Tax proposal claims to help the region's unincorporated areas, but the opposite is true.

There is no guarantee that the revenue from this tax, which is only on the unincorporated areas, will stay there. INEQUITY AT ITS WORST!

Why place a burden on just a few without actually guaranteeing they will receive the benefit and support their neighborhood needs?? This is a totally UNFAIR tax!

Join the San Diego County Taxpayers Association in rejecting this unfair, in equitable tax that would take advantage of some of the hardest hit communities in our region.

/s/

HANEY HONG
President & CEO
SD Taxpayers Association

DIANE JACOB
Former County Supervisor

BARRY JANTZ
Retired Healthcare Administrator /
Former La Mesa Councilmember

ROBERT F. KEVANE
Certified Public Accountant

 

PDF

— PDFs provided by the San Diego County Registrar of Voters

Replies to Arguments FOR

Arguments are the opinions of the authors, and have not been checked for accuracy by any official agency. 

 

REBUTTAL TO ARGUMENT IN FAVOR OF MEASURE A

We don't understand how unfairly taxing the hardest hit and spending the funds on everyone else promotes "social equity."

If a tax is being imposed on businesses in Ramona, Lakeside, and Fallbrook, then it would make sense if only those areas could vote on this measure. Likewise, you would think that the tax revenue would actually go towards public goods in the areas paying for it.

Unfortunately that IS NOT the case for either, and now these communities are in the unfair position of hoping everybody else doesn't force this tax on them.

Would you like it if you were the only one paying money for something, yet you didn't reap any of the benefits?

Shouldn't the taxes on cannabis businesses be used to provide safeguards to the unincorporated areas being taxed, instead of to whatever unrelated programs the County wants outside of those areas? A fair social equity program would do just that.

Show respect for your fellow San Diegans in the unincorporated parts of the County by voting NO on Measure A, and send the message that this is not the way we treat one another!

/s/

HANEY HONG
President & CEO, SD County Taxpayers Association

ROBERT F. KEVANE
Certified Public Accountant

BARRY JANTZ
Retired Healthcare Administrator/Former La Mesa City Councilman

 

PDF

— PDFs provided by the San Diego County Registrar of Voters

Replies to Arguments AGAINST

Arguments are the opinions of the authors, and have not been checked for accuracy by any official agency. 

 

REBUTTAL TO ARGUMENT AGAINST MEASURE A

Vote YES on Measure A! Cannabis businesses pay – San Diego County residents benefit.

The opponents to Measure A have their facts completely wrong. Measure A is good for taxpayers and is urgently needed for the County unincorporated area.

Measure A is fiscally responsible. It protects the County's budget from any new costs associated with cannabis regulation and protects funding for our unincorporated area communities. Measure A will help shut down illegal cannabis businesses that harm many unincorporated communities.

Measure A will ensure that San Diego County benefits from the 2016 voter-approved legalization of adult-use cannabis by creating a new revenue stream. These funds are urgently needed to invest in unincorporated area roads, parks, fire safety, social equity, and addressing homelessness.

This is not a tax on the people who live in unincorporated San Diego County or in any other part of San Diego. No one will pay unless they open a cannabis business in the unincorporated area.

Cannabis businesses in the City of San Diego, La Mesa, Lemon Grove, Vista, and Oceanside already pay their fair share – and it is only right that these businesses in the unincorporated area pay as well. This regulation extends those same requirements to cannabis businesses in unincorporated San Diego County.

A safe, regulated, and legal adult cannabis market is the right step forward for San Diego County. Measure A makes that possible. Vote YES on Measure A, this bipartisan solution.

/s/

NATHAN FLETCHER
Chair – San Diego County Board of Supervisors

NORA E. VARGAS
Vice-Chair – San Diego County Board of Supervisors

 

PDF

— PDFs provided by the San Diego County Registrar of Voters

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