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November 6, 2018 — California General Election
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City of Capitola
Measure I - Majority Approval Required

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Election Results


3,683 votes yes (75.77%)

1,178 votes no (24.23%)

To protect the quality of life in the City of Capitola and to fund essential City services such as sidewalks, streets, and emergency response, shall Capitola voters enact an ordinance establishing a tax of no more than 7% on cannabis businesses in the city, generating estimated revenue of up to $310,000 annually per cannabis business, to remain in effect until changed or ended by voters, with all funds staying local?

What is this proposal?

Measure Details — Official information about this measure

Impartial analysis / Proposal

Anthony Condotti, Capitola City Attorney

In 2016 voters approved the Adult Use of Marijuana Act, which legalized the recreational use of cannabis (marijuana) by adults in the State of California, and established a regulatory framework for commercial production, distribution and retail sales of cannabis products.  In early 2018, after initially waiting for the regulatory framework to take shape at the state level, the City Council directed staff to present options to allow limited retail cannabis sales. 

At its July 26, 2018, meeting, the City Council adopted an ordinance amending the Capitola Municipal Code by adding Chapter 5.36 “Retail Cannabis Licenses” and amending Chapter 17.24 “Commercial and Industrial Zoning Districts” to authorize retail cannabis sales in the C-R-Regional Commercial Zoning District. Under the terms of that ordinance, it will only go into effect with voter approval of the cannabis tax. 

At the same meeting, the Council ordered this Measure added to the November 6, 2018, ballot which, if approved, would establish a cannabis business tax cannabis for businesses operating in Capitola.  The ordinance would authorize the City Council to set a maximum tax rate of seven percent (7%) of gross receipts, and also sets the initial tax rate at seven percent (7%), i.e., the Council would retain the authority to reduce the tax rate.

The ordinance broadly defines "cannabis business" to include any for-profit or non­profit business that distributes, delivers, dispenses, exchanges, barters or sells either medical or non-medical cannabis and includes, but is not limited to, medical marijuana cooperatives and businesses, and any other business which transports, manufactures, compounds, converts, processes, prepares, stores, packages, sells at wholesale, or sells at retail, cannabis or products made of cannabis. The tax is not a sales tax imposed on persons who purchase or otherwise acquire cannabis for their personal use. The proposed tax is a “general tax” as defined by the California Constitution.  As such, all revenue it generates may be used by the City to pay for the provision of municipal services to City residents and visitors, including such services as emergency response, parks, street maintenance and repair, police, libraries, youth and senior programs, economic development and job creation, and other essential city services. 

This ballot measure has been placed on the ballot by the Capitola City Council.  It requires a simple majority to pass.


Published Arguments — Arguments for and against the ballot measure

Arguments FOR

With the passage of Proposition 64, which legalized adult-use cannabis, local governments were given the responsibility to provide oversight and regulate the legalization of cannabis business within their communities.

In the City of Capitola, Proposition 64 passed by more than 70%, indicating our community’s support for bringing adult-use cannabis out of the shadows and into regulated, safety-focused businesses for those who choose to participate. Establishing a cannabis tax is a commonsense component of any such regulation.

Earlier this year, after a robust public process, the City Council unanimously adopted an ordinance that allows the City to ensure public safety while overseeing this growing industry. To prioritize safety and visibility, the local ordinance will only allow up to two retail cannabis stores in the Regional Commercial zone district, located on 41st Avenue and Clares around the Mall.  The ordinance also creates buffer zones around schools and parks, and requires best-practice controls to ensure the stores are safely operated.

The ordinance to legalize cannabis businesses will not take effect unless and until this tax proposal is approved by the voters of Capitola. If approved by voters, the tax rate will be 7% in Capitola, the same as Santa Cruz County.

The tax is an important part of the City’s ongoing commitment to fiscal responsibility. It was carefully crafted in public forums to find the right balance between generating needed revenue while creating certainty for this emerging industry. Funds collected will be directed toward priorities set by residents such as maintaining long-term financial health and funding essential City services such as sidewalks, streets, and emergency response.

Measure I will provide additional funding to support the quality of life for our residents and our city.

Please join us in voting YES on Measure I.

Michael Termini
Mayor of Capitola

Jacques Bertrand
Vice Mayor of Capitola

Stephanie Harlan
Capitola Council Member

Kristen Petersen
Capitola Council Member

Peter Wilk
Capitola Treasurer


Arguments AGAINST

No Argument Against Measure I was filed.

More information

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