1. CANNABIS TAX OPTIONS City Council Meeting—February 5, 2018
Kim Espinosa, Planning Manager
John Bliss, President SCI Consulting Group

2. ACKNOWLEDGEMENTS Thank You to Merced’s “Team Cannabis”: SCI Consulting
Neil Hall
Arcelia Herrera
John Bliss
City Manager Steve Carrigan
Assistant City Manager Stephanie Dietz
Assistant City Attorney Kim Flores
Director of Development Services Scott McBride
Former Police Chief Norm Andrade
Planning Manager Kim Espinosa 
Planning & GIS Staff
Michael Hren
Julie Nelson
Michael Machado
Everyone Else Who Contributed

3. Overview of tonight’s meeting
How Did We Get Here? (Background)
Cannabis Tax Options
Public Comment
City Council Direction

4. CANNABIS TAX OPTIONS

5. Cannabis TAX GoALS Taxes for New Revenue (Fees for Full Cost Recovery)
Straightforward to administer
Optimal revenue
Address black market
Address other competitors
Address dynamic market place

6. Cannabis TAX Approach Council to consider a tax ordinance
Levied on the seller of goods or service providers
Levied on all steps in the supply chain
Will not affect local sales, state taxes, property tax rates, etc.

7. Tax Options - Methodology
Gross Receipts Tax
Straightforward, revenue scales with sales
Less predictability revenue
Recommended for Retail
Per Square Foot Tax
Predictable revenue, protection against crop loss
Recommended for Cultivation and Manufacturing
Hybrid – Gross Receipts and Per Square-Foot

8. EXAMPLES Modesto (Gross Receipts)
Cannabis Business Tax of Up to 10% of gross receipts of each business.
Approx. $1 million in annual revenue for General City Services, including neighborhood safety, maintaining parks and recreation, and job creation.
Coalinga (Square Foot)
An Annual Tax of $25.00 per square foot for the first 3,000 square feet and then $10.00 per square foot for the remaining space utilized in connection with each commercial marijuana operation.
Marysville (Hybrid)
Cannabis Business Tax at a rate up to 15% of gross receipts for the licensed sale of medical and non-medical marijuana, and up to $25 per square foot on the cultivation of cannabis by licensed growers
Estimated to generate $650,000 annually to fund General City Services
Annual adjustments by Consumer Price Index (CPI).

9. CANNABIS Tax MeasureS in CA
Voting Date
Results
November 2017 (General)
7 passed, no fails – 66.2% to 82.2%
June 2017 (Special)
1 passed, no others – 79.2%
November 2016 (General)
39 passed, 1 fail – 51% to 83.1%
November 2016 (Special)
1 fail, no others – 62.6%
June 2016 (General)
3 passed, 1 fail – 65.2% to 81.7%

10. Merced Cannabis tax options (SCI)
I. Retail
SCI Recommends
Gross Receipts
Medical
Max Rate of: 7%,
3% Initial Implementation
Non-Medical
Max Rate of: 10%,
4% Initial Implementation

11. Merced tax options (SCI) (cont.)
II. Manufacturing
SCI Recommends
Gross Receipts
Sq ft*
Hybrid
Medical and/or Non-Medical
Max rate of: 10%,
4% Initial
Max rate of: $25.00,
$7.00 Initial
* Applies to actual manufacturing floor/area, excludes bathrooms, hallways, etc.

12. merced tax options (SCI) (Cont.)
III. Cultivation
SCI Recommends
Indoor
Gross Receipts
Sq ft**
Hybrid
Medical and/or Non-Medical
Max rate of: 10%,
4% initial
Max rate of: $25.00,
$7.00 initial
Nurseries
Max rate of: 2%,
1% Initial
Max rate of: $4.00
$0.50 Initial
Max rate of: $3.00,
** Should be based on cultivation area (where any cultivation activities take place as defined by State) and excludes hallway, break rooms, etc.

13. MERCED tax options (SCI)(Cont.)
IV. Distribution
SCI Recommends Hybrid
of Both
Gross Receipts
Square Feet
Medical and/or
Non-Medical
Max rate of: 10%,
2% Initial Implementation
Max rate of: $5.00,
$1.00 Initial Implementation
V. Testing
SCI Recommends
Max rate of: $1.00
$0.25 Initial Implementation

14. Steps to Ballot Measure
Ballot Measure Development
City Council Direction on Ballot Timing
City Attorney and Consultant Develop Ballot Language
City Council Approval of Tax Ordinance/Ballot Measure
Public Outreach & Engagement
Develop Informational Materials
Create Distribution Strategy and Infrastructure
Public Education, Social Media, Press Engagement

15. Questions

16. PUBLIC COMMENT

17. CITY COUNCIL DIRECTION

20. Timeline for a june Ballot
January 2018
January 16, 2018 – Review of preliminary tax options and input – Direction from City Council
Organize non-governmental campaign committee
February 2018
February 5 or 20, 2018 – City Council consideration of language for Tax Ordinance
February 27, 2018 – Last day to submit ballot question, full tax text, and impartial analysis to the Registrar of Voters
March 2018
March 14, 2018 – Deadline to amend or withdraw a measure
Public information on Measure (Continues through Election)
April 2018
April 6, 2018 – Ballot mailing begins
June 2018
Community vote on June 5, 2018