San Jacinto City Council: Marijuana tax will make SJ city coffers grow

Outdoor marijuana cultivation was a hot topic during a special meeting of the SJ City Council

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The Adult Use of Marijuana Act (AUMA), was approved by California voters on Nov. 8 by nearly 56 percent of voters. It essentially legalized the recreational use of marijuana by adults 21 and older in California.

■ By Kyle Selby / Reporter

The San Jacinto City Council held a special meeting at City Hall on Dec. 14 to discuss the rules and regulations of adult marijuana usage in the San Jacinto Valley.
Jordan Ferguson and Seth Merewitz from the city attorney’s office offered a special presentation before the City Council in light of the recently passed California Proposition 64. The meeting’s agenda consisted of discussing recent marijuana trends, describing the definition of Proposition 64, the regulatory options for the city, and discussing the city’s current proposal on marijuana laws. City Council members Andrew Kotyuk, Crystal Ruiz, and newly elected Russ Utz were present, beside Mayor Scott Miller and Mayor Pro-Tem Alonso Ledezma.
The Adult Use of Marijuana Act (AUMA), was approved by California voters on Nov. 8 by nearly 56 percent of voters. It essentially legalized the recreational use of marijuana by adults 21 and older in California. Users can partake at home (not in public), and can possess up to 28.5 grams of cannabis plant material or 8 grams of concentrate. Prop 64 also allows the indoor cultivation of up to six plants for personal use inside a private residence or accessory structure, and the possession of any marijuana produced by those plants.
California excises a tax of 15 percent on medical and recreational marijuana. The state cultivation tax is $9.25 on flower and $2.75 on non-flower plant leaf for medical and recreational growth. Then there’s the creation of the Division Code to license marijuana businesses.
AUMA allows local governments like San Jacinto to ban any of the following: recreational retailers, medical dispensaries, any delivery service from or terminating in the San Jacinto jurisdiction, outside cultivation, and any other state-licensed marijuana businesses licensed under Division 10.
The current law in San Jacinto Municipal Code Chapter 9.28 allows medical marijuana dispensaries, medical marijuana delivery services and the cultivation of marijuana.
Outdoor cultivation was a hot topic during Wednesday’s meeting. The presentation broke down the regulations and bans San Jacinto can lawfully enforce. Firstly, outdoor cultivation can be banned outright if the Council deemed it fit. Alternatively, outdoor cultivation would be allowed, if plants are in enclosed spaces, or screened from view (greenhouses and fences). Property owner approval of cultivation within a property is required; landlords or homeowners associations need to be consulted and grant access before cultivation begins on their property. A limit to the number of plants that can be cultivated outdoors can be determined as well.

The city cannot ban indoor cultivation of up to six plants, however they can “reasonably regulate” indoor cultivation by requiring cultivation permits, allowing cultivation for personal use only, allowing commercial cultivation with an accompanying business license, or imposing an alternative set of public welfare regulations, without the use of a permit.
Councilwoman Ruiz shared her concerns about the butane hash oil explosions that have been happening in Colorado, a state that legalized cultivation of marijuana back in 2014. Ferguson ensured that more deputies would be needed to regulate such disasters. The regulations of both medical and recreational uses were discussed. Increasing security, hours of operation, and limiting loitering outside of dispensaries were considered for medical marijuana, while the ban of all commercial activity could possibly be imposed as well.
Generally, the city has revenue options for any marijuana use it allows: conditional-use permits, which can include reimbursing the city with some costs associated with the operation of any marijuana use. If they are operating in a commercial sense, the city can require them to obtain a business license and pay any associated fees.
The voters of San Jacinto have passed both a sales tax and a cultivation tax, which means commercial use can be taxed. The amounts of taxation was imposed by the Council, however the vote that was taken provided a zero to $50 amount range per square foot. Ferguson explained to the Council that traditionally, other cities in California have imposed a flat tax rate. Cultivating, manufacturing, etc., have most often been taxed per square foot with a flat tax, because it is the easiest option to implement; avoiding any confusion between the city and the user.

You could be granular. You could say, ‘every different use has a different rate. But then you’d have to figure out a system of auditing and figuring out what spaces are used for what uses.” – Jordan Ferguson, city attorney’s office

According to City Manager Tim Hults, based on those rates, the total amount that could potentially be generated would be $10 million the first year, $13.5 the second year, $23 million by 2020. Hults also identified an estimated $1.4 million additional expenditure that would come with the adoptions of these tax rates, which includes a code enforcement officer, an accountant, and the re-establishment of the special enforcement team of roughly five deputies.
On top of those expenditures, he suggested the equivalent of 10 patrol deputies, a fire response engine to Fire Station 25, and a squad to Station 78, which rounds about to $3.6 million the second year. For year three, Hults suggested another code enforcement officer, another accountant and five more patrol deputies.
Ultimately the Council’s motion carried to implement tax rates of $25 for indoor cultivation, manufacturing, and testing, $15 for outdoor cultivation, and $10 for distribution and transport, per square foot in San Jacinto.
“There’s a lot more work to be done than just saying we’re going to have a permit for the six plants,” explained Mayor Scott Miller. “There’s a lot more that has to go into this.”
The motion to implement the proposed San Jacinto regulatory ordinance, which consists of the ban on all marijuana uses except as authorized elsewhere, an indoor cultivation permit, and commercial cultivation permits carried as well.
Utilizing the new guidelines of cultivation, and how they factor into the community’s land use; considering location criteria, permit issuance, development standards, standalone uses, and water availability were also discussed. A motion pertaining to San Jacinto’s land use ordinance will be revisited.
“We want to be ahead of the curve in the state,” said Councilman Kotyuk. “We want to set that gold standard of what it should be, but also give an advantage to those that are partnering with the city because we want those revenue streams to stay, and those things that benefit the city, so the sooner we can get there, the better.”

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