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San Joaquin County, CA November 2, 2010 Election
Measure I
Business Tax on Permitted Marijuana Sales
City of Stockton

Majority Approval Required

Pass: 35961 / 66.60% Yes votes ...... 18032 / 33.40% No votes

See Also: Index of all Measures

Results as of Nov 23 1:19pm, 100.0% of Precincts Reporting (167/167)
Information shown below: Impartial Analysis | Arguments | Full Text

Shall Stockton's Business License Tax Ordinance be amended to establish new business categories of: (1) permitted "Medical Cannabis Dispensaries" at a tax rate of $25.00 for each $1,000.00 of gross receipts; and (2) non-medical "Marijuana Businesses" at a tax rate of $100.00 for each $1,000.00 of gross receipts, for general fund revenue to mitigate impacts on City services such as police, fire and code enforcement?

Impartial Analysis from the Stockton City Attorney
The Stockton City Council has placed Measure I on the November 2, 2010, general municipal election ballot asking voters to adopt an ordinance that would amend Stockton's Business Tax Ordinance, as codified in Title 5 of the Stockton Municipal Code, to add Chapters 5.98 and 5.99.

The new Chapter 5.98 would establish a new business license tax category of "Medical Cannabis Dispensaries" at a tax rate of $25.00 for each $1,000.00 of gross receipts from the businesses' activity in Stockton. The amendment will tax gross receipts from such businesses that sell, cultivate, or distribute cannabis in accordance with Health and Safety Code sections 11362.5, 11362.7-11362.83 or as these laws may be amended from time to time.

In addition, this measure would add a new Chapter 5.99 to create a new business license tax category of "Marijuana Businesses" at a tax rate of $100.00 for each $1,000.00 of gross receipts from the businesses' activity in Stockton. This amendment will tax gross receipts from such businesses that sell, cultivate, or distribute marijuana for any non-medical business, personal or recreational purpose, or activity should Proposition 19, also known as "The Regulate, Control and Tax Cannabis Act of 2010," or another similar measure, be enacted into state or federal law that would allow for or permit the use of marijuana for such purposes.

The proposed business license tax on "Medical Cannabis Dispensaries" and "Marijuana Businesses" is a general tax because the City can use the tax revenue for any legal municipal purpose. The California Constitution, Article XIII(C), Section 2(b) requires that the electorate approve a general tax by a majority vote. Before the City can establish the new tax rates for "Medical Cannabis Dispensaries" and "Marijuana Businesses," a majority of the electorate must approve the measure.

Submitted by:

/s/ John M. Luebberke, Interim City Attorney

 
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Arguments For Measure I Arguments Against Measure I
The voters of California authorized the use of medical marijuana in 1996.

The City of Stockton has worked to create an ordinance that regulates a system of Medical Cannabis Dispensaries. Regulations within the ordinance will be used to prevent problems sometimes associated with this business activity, while protecting and keeping customers away from the criminal market.

Stockton's business tax system currently does not have a category for Medical Cannabis Dispensaries. Without a new category, Medical Cannabis Dispensaries would pay the "general retail rate" of $0.90 (0.09%) per $1,000.00 of gross receipts. Measure I creates a new business category and rate for permitted Medical Cannabis Dispensaries, with a rate of $25.00 (2.5%) per $1,000.00 of gross receipts. We believe this higher rate will reimburse the City for costs associated with this unique business activity.

In the November 2, 2010 General Election, California voters will also consider Proposition 19, which is a statewide initiative to allow people 21 years or older to possess, cultivate, or transport marijuana for personal use. Proposition 19 would also permit local governments to regulate and tax commercial production, distribution, and sales of marijuana to people 21 years or older.

If a majority of California voters pass Proposition 19, Stockton's Measure I, while not advocating a position for or against Proposition 19, would impose an additional tax category for non-medical Marijuana Businesses, with a rate of $100.00 (10%) per $1000.00.

Revenue generated from one or both business tax categories will help address Stockton's budget imbalance, and also serve to mitigate the additional use of City services related to Medical Cannabis Dispensaries or non-medical Marijuana Sales. These are unique business activities that would put a strain on public safety and regulatory services in the City.

A yes vote will impose a business tax on permitted Marijuana business activities.

Submitted by:

/s/ Ann Johnston, Mayor, City of Stockton /s/ Katherine Miller, Vice Mayor, City of Stockton

Rebuttal to Arguments For
Vote NO on Measure I

Don't be fooled by Measure I! The proposed increased tax rate of 2.5% will impose an even greater burden on Stockton patients' safe and reliable access to their medicine. This "unique business category" and tax rate further marginalizes patients and dispensaries that are legally operating in the city. The higher tax rates will inevitably be passed down to patients. Studies have repeatedly demonstrated that this unique type of business does not incur additional costs to the city, as criminal activity does not increase in areas surrounding medical marijuana dispensaries. Not only do patients in Stockton already pay the city's general retail tax on their medicine, but the city also has an Ordinance regulating dispensaries, which in effect should prevent any strain on public safety. Under Measure I, an additional tax will also be imposed on non-Medical marijuana, if Proposition 19 passes. Rather than increasing the taxes on medicine, recreational use or large-scale cultivation could be taxed exclusively without having to burden patients at all. Americans for Safe Access strongly supports patients' rights and opposes any more taxation of medical marijuana. Vote NO on Measure I!

Submitted by:

/s/ Steph Sherer, Executive Director, Americans for Safe Access

Vote NO on Measure I

Stop taxing patients! This is a tax on patients who need and use medical marijuana more than it is a tax on the businesses that supply it. Medical marijuana is a prohibitively expensive medication for many patients who are legally qualified to use it. The proposed additional tax of 2.5% will place an even greater tax burden on sick patients and make an expensive medication even more unaffordable. Stockton patients already pay 9% sales tax on the medication they purchase from dispensaries. In the United States, patients are not taxed for the other prescription medication they need. Why should medical marijuana be treated any differently? Why punish the thousands of patients living with chronic pain, nausea from chemotherapy, spasticity from multiple sclerosis, and many other conditions that medical marijuana is effective in treating? Americans for Safe Access, the country's leading medical marijuana patients' rights group, opposes placing any further tax burden on medical marijuana patients. Vote NO on Measure I!

Submitted by:

/s/ Kris Hermes, Media Director, Americans for Safe Access

Rebuttal to Arguments Against
While medical marijuana is legal in California, dispensing it to patients does create new burdens for communities.

Given the dire financial situation Stockton finds itself in, it's imperative that the City prepare for any new demands on its resources.

Under a new Medical Cannabis Ordinance, Stockton will strictly regulate dispensaries to control their number, locations, security and operational standards.

To provide for the public's safety, regular inspections are required to ensure that all security standards are being maintained; that no cannabis is being consumed within 200 feet of the dispensaries; and that any edible cannabis products comply with health and safety standards.

The Stockton Community Development Department, Fire Department, and Police Department will be called upon to monitor hours of operation, prevent sales to minors, and track video surveillance and alarm systems.

This all costs money. And the City is strapped for every dollar.

Medical marijuana is NOT just like every other prescription drug. It is not manufactured in tightly controlled laboratory settings; it is not sold at the corner Walgreen's.

In other California communities, failure to tightly regulate medical marijuana dispensaries has resulted in serious problems.

Measure I will allow, for the first time, the compassionate dispensing of medical marijuana to local patients here, in their own community.

But the increased costs to the City should be covered by newly licensed dispensaries.

It's only fair that the businesses generating the need for new services, and not the general public, bear the greater burden of paying for them.

Submitted by:

/s/ Ann Johnston, Mayor, City of Stockton /s/ Katherine Miller, Vice Mayor, City of Stockton

Full Text of Measure I
AN ORDINANCE AMENDING TITLE 5 OF THE STOCKTON MUNICIPAL CODE BY ADDING CHAPTER 5.98 TO APPLY A BUSINESS LICENSE TAX TO MEDICAL CANNABIS DISPENSARIES AND ADDING CHAPTER 5.99 TO APPLY A BUSINESS LICENSE TAX TO NON-MEDICAL MARIJUANA BUSINESSES AT A HIGHER TAX RATE

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STOCKTON, AS FOLLOWS:

SECTION 1. PURPOSE.

This Ordinance amends Title 5 of the Stockton Municipal Code by the addition of Chapter 5.98 and Chapter 5.99, and is made effective by voter approval of a business license tax ballot measure at the November 2, 2010, general municipal election.

SECTION 2. FINDINGS.

(1) On November 5, 1996, the voters of the State of California approved Proposition 215, which enacted the Compassionate Use Act of 1996, codified at California Health and Safety Code 11362.5 ("the Compassionate Use Act"). The Act decriminalizes otherwise unlawful possession and cultivation of marijuana for certain medical purposes under certain limited and specified circumstances.

(2) In 2003, the California Legislature enacted Senate Bill 420, effective January 1, 2004, adding Article 2.5, "Medical Marijuana Program" to Division 10 of the California Health and Safety Code 11362.7, et seq. ("the Medical Marijuana Program"). The Medical Marijuana Program created a state-approved voluntary medical marijuana identification card program and provided for certain additional immunities from state marijuana laws. The Medical Marijuana Program also authorized cities and other local governing bodies to adopt and enforce consistent rules and regulations.

(3) Since the passage of the Compassionate Use Act and the Medical Marijuana Program, California communities have been inundated with the establishment and operation of businesses, dispensaries, collectives, cooperatives, associations, non-profit organizations, and other similar entities, which cultivate, dispense, sell, store, exchange, process, deliver, transmit, and make available marijuana and/or marijuana products for medicinal purposes.

(4) The business license tax regulations of the City of Stockton ("City"), as codified in Title 5 of the Stockton Municipal Code, provide a mechanism for the administration and imposition of business license taxes upon professions, trades, callings, occupations, and businesses, as set forth therein.

(5) The City's business license tax regulations do not, however, include a business license tax category for dispensaries, collectives, cooperatives, associations, non-profit organizations, or other similar entities which cultivate, distribute, dispense, store, exchanges, process, deliver, make available, transmit, or give away for reimbursement marijuana for medicinal purposes to qualified, patients, persons with identification cards, and/or primary caregivers pursuant to the Compassionate Use Act and the Medical Marijuana Program, commonly referred to as "medical marijuana dispensaries" or "medical marijuana cooperatives or collectives."

(6) California cities that have permitted the establishment and operation of "medical cannabis dispensaries" have experienced and reported negative secondary effects and adverse impacts, including an increase in crimes of marijuana and narcotics distribution and use; an increase in other criminal activities in the vicinity of these facilities, such as robbery of patients as they go in or leave the dispensaries; increased instances of DUIs and street dealings of illegal drugs; burglary of facilities dispensing medical marijuana; increase in violent crimes, such as armed robberies and murders; loss of trade for other commercial businesses located near these facilities; organized crime involvement in the ownership and operation of cannabis dispensaries; money laundering and firearm violations; physicians making recommendations for questionable or potentially questionable cases of qualified use of medical marijuana; unjustified and fictitious physician recommendations; street dealers in the vicinity of dispensaries offering marijuana at a lower price to arriving patrons; smoking of marijuana in the public; increased noise and pedestrian traffic.

(7) The people of Stockton desire to amend the City's business license tax regulations by adding Chapter 5.98 (Medical Cannabis Business License Tax) to Title 5 (Business Licenses and Regulations) of the Stockton Municipal Code ("Ordinance"), which establishes a new business license tax category for "Medical Cannabis Dispensaries," defined as: any facility or location, whether collective or cooperative, for-profit or non-profit, where medical cannabis (also known as medical marijuana) is made available to, distributed by, or distributed to one or more of the following: a qualified patient, a person with an identification card, or a primary caregiver in accordance with Health and Safety Code sections 11362.5, 11362.7-11362.83, or as these laws may be amended from time to time.

(8) The people of Stockton further desire to impose the following business license tax: an annual business license tax in the amount of $25.00 for each $1000 of gross receipts on any Medical Cannabis Dispensary, as defined herein.

(9) Proposition 19, also known as "The Regulate, Control and Tax Cannabis Act of 2010," is a state-wide initiative on the ballot for the November 2, 2010, election ("Proposition 19"). If passed by the voters of the State of California, Proposition 19 would add Sections 11300 through 11304 to and will amend Section 11361 of Health and Safety Code, which would, among other activities: legalize the personal use, possession, processing, consumption, and transportation of up to one ounce of marijuana by persons over the age of 21; permit the cultivation of marijuana on private property by owners, lawful occupants, residents, or guests over the age of 21 in an area of not more than 25 square feet per private residence or parcel; authorize local governments to enact ordinances allowing, regulating, and licensing the establishment of commercial and retail businesses that engage in the cultivation, production, processing distribution, transportation, and sale of marijuana; allow local governments to impose special, general, excise, transfer, or transactional taxes, as well as regulatory fees on marijuana related activities. Section 11302 of Proposition 19 specifically authorizes local government such as the City to impose general and excise taxes on activities authorized by Proposition 19, including but not limited to Marijuana Businesses in order to raise revenue.

(10) The business license tax regulations of the City, as codified in Title 5 of the Stockton Municipal Code, provide a mechanism for the administration and imposition of business license taxes upon professions, trades, callings, occupations, and businesses as set forth therein.

(11) The people of Stockton desire to amend the City's business license tax regulations by adding Chapter 5.99 (Marijuana Business License Tax) to Title 5 (Business Licenses and Regulations) of the Stockton Municipal Code ("Ordinance"), which establishes a new business license tax category for "Marijuana Businesses," defined as: any for- profit or non-profit business, firm, corporation, partnership, entity, organization, association, or any person engaged in cultivation, planting, harvesting, production, processing distribution, transportation, manufacturing, compounding, converting, processing, preparing, storing, packaging, testing, selling, whether retail or wholesale of marijuana, any part of the plant Cannabis sativa L or any of its derivatives. Marijuana Business under this Ordinance shall not include as any collective, cooperative, association, or similar entity that cultivates, distributes, dispenses, stores, exchanges, processes, delivers, makes available, transmits, or gives away marijuana in the City for medicinal purposes to qualified patients, persons with an identification card, or primary caregivers pursuant to Health and Safety Code sections 11362.5, 11362.7-11362.83, or as these laws may be amended from time to time.

(12) The people of Stockton further desire to impose a business license tax on Marijuana Businesses in the following amount: an annual business license tax in the amount of $100 for each $1000 of gross receipts on any non-medical Marijuana Business, as defined herein.

(13) If approved and passed by the voters of the City of Stockton on November 2, 2010, the Marijuana Business License Tax imposed by this Ordinance and Chapter 5.99 shall only take effect if Proposition 19 is adopted by the voters of the State of California, or at such date and time as any state or federal law is subsequently enacted or amended from time to time that would similarly allow for or permit the use of marijuana for any non-medical business, personal, or recreational purpose or activity. No business license for Marijuana Business shall be issued by the City until the City Council adopts or enacts specific regulations which allow for the establishment and operation of Marijuana Businesses within the City.

(14) The people of Stockton further find that the proposed business licenses taxes on Medical Cannabis Dispensaries and Marijuana Businesses are general taxes, the revenues of which would be used for general governmental purposes, and placed in the City's general fund for the usual expenses and providing essential City services, including but not limited to law enforcement and fire services, animal control, code enforcement, building inspection, plan checks, planning, and public works.

(15) The people of Stockton further find that the proposed amounts and rates of the business license taxes on Medical Cannabis Dispensaries and Marijuana Businesses are not prohibitive or confiscatory, and are instead reasonable and necessary to provide the general fund revenue to help mitigate the costs and burdens on the City's services, including but not limited to law enforcement, fire, code enforcement, building and safety, and planning in addressing and mitigating the negative secondary effects and adverse impacts of such businesses.

(16) California Constitution Article XIIIC, Section 2(b), provides that no local government may impose a general tax unless and until that tax is submitted to the electorate and approved by a majority vote.

(17) The taxes imposed by this Ordinance are excise taxes on the privilege of conducting business within the City. The proposed business license taxes are not taxes imposed on real property, property ownership, transactions in real property, or the sale of real property.

SECTION 3: STOCKTON MUNICIPAL CODE AMENDMENT

CHAPTER 5.98 + "MEDICAL CANNABIS
BUSINESS LICENSE TAX"

Chapter 5.98, entitled "Medical Cannabis Business License Tax," is hereby added to Title 5 (Business Licenses and Regulations) of the Stockton Municipal Code to read as follows:

5.98.010 Purpose and Intent.

This Chapter is enacted solely to raise revenue for municipal purposes and is not intended for regulation.

5.98.020 Definitions. For the purpose of this chapter, unless it is plainly evident from the context that a different meaning is intended, the following definitions shall apply:

"City" shall mean City of Stockton

"City Council" shall mean the City Council of the City of Stockton

"Code" shall mean the Stockton Municipal Code

"Gross Receipts" shall mean the total of the amounts of monetary consideration actually received or receivable for medical marijuana, medical marijuana products, overhead costs, operating expenses, or related services whatsoever, including but not limited to: membership dues, any monetary contributions, payments, reimbursements or fees for cultivation, distribution, dispensing, storing, exchanging, processing, delivering, making available, or transmitting medical marijuana or medical marijuana edible products pursuant to Health & Safety Code sections 11362.5 and 11362.7-11362.83, overhead costs, operating expenses, or services in connection therewith. Included in gross receipts shall be all receipts, cash, credits, and property of any kind without deduction of the cost of the property sold, the cost of the materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever.

"Licensee" shall mean a person who has been issued a business license for transacting or carrying on the business of operating a Medical Cannabis Dispensary pursuant to this Code.

"Medical Cannabis Dispensaries" means any facility or location, whether collective or cooperative, for-profit or non-profit, where medical cannabis (also known as medical marijuana) is made available to, distributed by, or distributed to one or more of the following: a qualified patient, a person with an identification card, or a primary caregiver in accordance with Health and Safety Code sections 11362.5, 11362.7-11362.83, or as these laws may be amended from time to time.

5.98.030 Payment of Tax.

(a) Notwithstanding any provision to the contrary, every business, including non-profit organizations, operating as a "Medical Cannabis Dispensary," shall pay the following tax:

1. On, or after January 1, 2011, a maximum of $25 for each $1,000 of gross receipts per year.

2. Notwithstanding the tax rate imposed by subsection (a)1, the City Council may, in its discretion, at any time by ordinance or resolution implement any lower tax rate it deems appropriate, and may increase such tax rate from time to time not to exceed the maximum tax rate imposed by subsection (a)1.

5.98.040 Administrative Guidelines.

In addition to rules and regulations that may be established by the City Council pursuant to Section 5.04.230 of this Code, the City Manager may establish and amend administrative guidelines as needed to administer this Chapter. The administrative guidelines shall have the force of law and shall be enforceable in the same manner and to the same extent as the provisions of this Chapter.

5.98.050 Effective Date.

Unless otherwise specified, this ordinance shall take effect and be in full force and effect thirty (30) days after its passage.

SECTION 4: STOCKTON MUNICIPAL CODE AMENDMENT

CHAPTER 5.99 + " MARIJUANA BUSINESS
LICENSE TAX"

Chapter 5.99, entitled "Marijuana Business License Tax," is hereby added to Title 5 (Business Licenses and Regulations) of the Stockton Municipal Code to read as follows:

5.99.010 Purpose and Intent.

This Chapter is enacted solely to raise revenue for municipal purposes and is not intended for regulation. This Chapter shall take effect only if Proposition 19, also known as "The Regulate, Control and Tax Cannabis Act of 2010" is passed and adopted by the voters of the State of California on November 2, 2010; or shall become effective at such date and time as any state or federal law is subsequently enacted or amended from time to time that would similarly allow for or permit the use of marijuana for any non-medical business, personal, or recreational purpose or activity. No business license shall be issued until and unless the City Council adopts or enacts regulations which specifically allow the establishment and operation of Marijuana Businesses, as defined in this Chapter, within the City.

5.99.020 Definitions.

For the purpose of this chapter, unless it is plainly evident from the context that a different meaning is intended, the following definitions shall apply:

"Marijuana Business" shall mean any for-profit or non-profit business, firm, corporation, partnership, entity, organization, association, or any person engaged in cultivation, planting, harvesting, production, processing, distribution, transportation, manufacturing, compounding, converting, processing, preparing, storing, packaging, testing, or selling, whether retail or wholesale of marijuana, any part of the plant Cannabis sativa L or any of its derivatives. Marijuana Business shall not include Medical Cannabis Dispensaries, as defined in Section 5.98.020 of this Code.

"City" shall mean City of Stockton

"City Council" shall mean the City Council of the City of Stockton

"Code" shall mean the Stockton Municipal Code

"Gross Receipts" shall be defined as set forth in Section 5.04.010 of this Code, unless otherwise provided.

5.99.030 Payment of tax.

(a) In addition to any requirements imposed by this Code, a Marijuana Business shall pay an annual business license tax in the amount of $100 per $ 1,000.00 of Gross Receipts.

(b) The City Council may impose the tax authorized by this section at a lower rate. No action by the City Council under this subsection shall prevent it from subsequently increasing the tax rate for Marijuana Business to the maximum specified in this section.

5.99.040 Effective Date of this Chapter.

Section 4 of this Ordinance, adding Chapter 5.99, entitled "Marijuana Business License Tax," to Title 5 (Business Licenses and Regulations ) of the Stockton Municipal Code, shall take effect upon the date that this Ordinance is passed and adopted by the voters of the City of Stockton, as confirmed by the City Council's declaration of the vote, but will only be implemented if Proposition 19, also known as "The Regulate, Control and Tax Cannabis Act of 2010," is passed and adopted by the voters of the State of California on November 2, 2010, or upon the effective date of any state or federal law that may be subsequently enacted or amended from time to time that would similarly allow for or permit the use of marijuana for any non-medical business, personal, or recreational purpose or activity. No business license for any Cannabis Business shall be issued by the City until and unless the City Council enacts an ordinance and/or regulations specifically permitting the establishment and operation of Marijuana Businesses within the City.

SECTION 5. AMENDMENT OR REPEAL.

Chapter 5.98 and Chapter 5.99 of the Stockton Municipal Code may be repealed or amended by the City Council without a vote of the people. However, as required by Article XIIIC of the California Constitution, voter approval is required for any amendment that would increase the rate of tax levied pursuant to this Ordinance. The people of the City of Stockton affirm that the following actions shall not constitute an increase of the rate of a tax:

(1) The restoration of the rate of the tax to a rate that is no higher than that set by this Ordinance, if the City Council has acted to reduce the rate of the tax;

(2) An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, so long as interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this Ordinance;

(3) The establishment of a class of person that is exempt or excepted from the tax or the discontinuation of any such exemption or exception (other than the discontinuation of an exemption or exception specifically set forth in this Ordinance); and

(4) The collection of the taxes imposed by this Ordinance, even if the City had, for some period of time, failed to collect the tax.

SECTION 6. SEVERABILITY.

If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, the remaining portions of this Ordinance shall nonetheless remain in full force and effect. The people hereby declare that they would have adopted each section, subsection, sentence, clause, phrase, or portion of this Ordinance, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions of this Ordinance be declared invalid or unenforceable.


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