CA: Simi Valley, Thousand Oaks, Place Pot Business Tax Measures On November Ballots

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The Simi Valley and Thousand Oaks city councils have placed measures on their cities’ Nov. 6 ballots that will ask voters whether marijuana businesses in their respective towns should be taxed.

The two east Ventura County councils voted to do so last week.

Simi Valley thus far is not allowing any marijuana businesses in the city. Thousand Oaks is permitting one medical marijuana dispensary and one marijuana testing facility

In west Ventura County, meanwhile, the Oxnard City Council also voted last week to place a marijuana business tax measure on the city’s Nov. 6 ballot. Oxnard this year approved medical marijuana deliveries in the city.

Currently, the cities’ measures would pass if approved by a simple majority of voters. But, if a proposed statewide ballot measure, the Tax Fairness, Transparency and Accountability Act, makes it onto the November ballot and passes by a two-thirds margin, all proposed local tax measures would also need to pass by a two-thirds vote. The act would retroactively apply to all 2018 local tax measures.

Fillmore thus far is the only city in the county with a cannabis business tax, which was approved by that city’s voters in 2016.

The City Council, however, banned all commercial marijuana activities the following year. But on May 22, it voted 3-2 to place a measure on the city’s Nov. 6 ballot asking voters to decide whether Fillmore should allow commercial-scale medical marijuana cultivation, which would be taxed.

California voters in 2016 approved Proposition 64, which legalized recreational marijuana use for people 21 years or older statewide, but lets local jurisdictions ban cannabis businesses.

Since Simi Valley thus far is not allowing any marijuana businesses in the city, why the need for a marijuana business tax?

Simi Valley Deputy City Manager Samantha Argabrite said it’s a pre-emptive move.

“The City Council wants to get ahead of any changes that may occur with regard to local control and cannabis,” she said.

For example, she said, the now-dead proposed Senate Bill 1302 would have prohibited local bans on marijuana deliveries.

“While the City Council has banned deliveries into the community, if state law (ever) changes, requiring us to allow them, then the city will be positioned to collect tax on those deliveries,” should the tax measure be approved by voters, she said.

The measure includes initial and maximum tax rates on marijuana businesses’ gross receipts.

For instance, the proposed tax on a dispensary would be 4 percent initially with a maximum tax of 6 percent. The proposed tax on a testing lab would be 1 percent initially with a maximum tax of 2.5 percent.

It would be up to the City Council to increase the tax rates to the maximums if it wanted to at some point, Argabrite said.

In a related development, Simi Valley Councilman Glen Becerra proposed at last week’s council meeting that the city place a second marijuana-associated measure on its Nov. 6 ballot. If approved by voters, that measure would require any marijuana businesses the city eventually allows to be in an industrial-zoned part of town on its west end. That area is zoned for adult businesses, but there aren’t any in Simi Valley, Becerra said. The council will take up the proposed ballot measure at its June 18 meeting.

Unlike Simi Valley, Thousand Oaks has decided to allow one medical marijuana dispensary and one marijuana testing facility in an industrial-zoned part of town if applicants pass the city’s four-stage comprehensive review and selection process.

If approved by voters, Thousand Oaks’ marijuana business tax would go into effect Jan. 1 if a dispensary and/or testing facility is operating by then. The City Council hopes to select the operators in July.

Thousand Oaks’ proposed tax rates are the same as Simi Valley’s.

In addition to being taxed by the city, the cannabis businesses would also be taxed by the state.

Like Simi Valley, the Thousand Oaks tax rates may never go up to their maximums. That would be the City Council’s decision, said Melissa Hurtado, the city’s revenue operations manager.

The tax revenue would go into the city’s general fund and could be used for many purposes, including supporting law enforcement activities related to marijuana compliance and education, Hurtado said.

According to both Argabrite and Hurtado, although Port Hueneme is allowing a variety of cannabis business activities in the city, it has not yet proposed a tax measure.

Instead, the city requires a development agreement that incorporates a fee payable to the city of 5 percent of gross receipts, they said.