Pass: 9,076 / 82.08% Yes votes ...... 1,981 / 17.92% No votes

See Also: Index of all Measures

Fiscal Impact from City Financial Director:

Measure L, if approved by the voters, would add an ordinance to the Santa Cruz Municipal Code imposing a business tax, at the time of enactment, of 7% on the gross receipts of cannabis (medical marijuana) businesses in the City. Measure L would allow the City Council to increase the rate to no more than 10%. This tax could become effective in January, 2015, with expected first collections received by the City in February, 2015.

Use of the Funds. The cannabis business tax revenue would be held in the City's General Fund and used solely for primary support services that include Police, Fire, Public Works, Parks & Recreation, community programs and other essential services.

Fiscal Impact. The fiscal impact of this tax cannot be accurately estimated because the City currently has limited access to gross receipts records of cannabis businesses. However, when compared to sales tax data, and based on the zoning limitation of no more than two legally active cannabis businesses, it is estimated that the 7% tax rate could generate approximately $33,000 in new revenue in the first, partial, fiscal year and $66,000 to $93,000 for a full tax year. (The ordinance applies to all cannabis businesses operating in the City, whether or not they are doing so legally.) The cannabis businesses will be required to file a statement of gross receipts, and pay the business tax on a monthly basis to the City. A penalty plus interest will be imposed if the tax is not paid timely.

There will be additional administrative costs to set up reporting procedures as well as perform routine collection and financial audits. These City costs are estimated to be approximately $2,200 annually. Additional costs may be incurred for any enforcement actions.

Accountability. The City's Finance Director is the tax administrator, and has the authority to examine the books and records of the cannabis businesses to verify the accuracy of the statement of gross receipts that was filed and the business tax computed thereon. The Finance Director also has the authority to issue an assessment to a cannabis business for the estimated amount of tax owed if a statement is not filed and a tax is not paid by the business.

s/ Marcus A Pimentel
Finance Director
City of Santa Cruz

Impartial Analysis from City Attorney

This ballot measure, if adopted by the voters, would add an ordinance to the Santa Cruz Municipal Code imposing a cannabis business tax on cannabis (marijuana) businesses which operate in the City. The ordinance authorizes the City Council to set a maximum tax rate of ten percent (10%) of gross receipts but sets the initial tax rate at seven percent (7%) of gross receipts. The ordinance broadly defines "cannabis business" to include any for-profit or non-profit business which 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 a gross receipts tax imposed on cannabis businesses and is not a sales tax imposed on qualified patients, primary caregivers or other persons who purchase or otherwise acquire cannabis for their personal use. All cannabis business tax revenue will be deposited in the City's General Fund. General Fund revenue is used by the City to pay for the provision of municipal services to City residents and visitors including the provision of essential City services. Because the proposed cannabis business tax would be imposed for general municipal governmental purposes, the ballot measure proposes a "general tax" as defined by Article XIII of the California Constitution. Accordingly, for the ballot measure to be adopted, it must receive a simple majority "yes" vote.

This ballot measure has been placed on the ballot by the Santa Cruz City Council.

s/ John G. Barisone
City Attorney