CITY COUNCIL MEETING
NOVEMBER 7, 2023
DOCUMENTS RECEIVED AFTER
PUBLISHED AGENDA
PUBLIC COMMENTS
From: Reena Karia
Sent: Tuesday, November 7, 2023 12:40 PM
To: List-Mayor-Council <[email protected]> Subject: Public Comment - City Council Meeting - Nov 7, 2023
CAUTION:This is an external email. Do not click on links or open attachments unless you know the content is safe.
Esteemed City Council Members, Mayor Salinas, and City Staff,
My name is Shane Gill and my comment is on behalf of my company Manifest California, one of the first businesses to be awarded a commercial cannabis license from the City of Hayward in 2018. As of yet, we are not open and we are struggling to do so. With over regulation and the pandemic, these have been hard years for us. But we are choosing to believe that we can work with city officials to make this happen. We do not have corporate backing and cannot find meaningful investment with the current city tax rates and economic circumstances. Manifest California is a family run business that encompasses multiple identities and is intergenerational. We are South Asian, woman, and veteran-owned and operated.
My comment today is about the 7% tax across all types of cannabis business activities. We are requesting for Council, City Staff, and the Economic Development committee to consider a tiered approach to cannabis business taxes. We have no issue with a 7% tax on gross profits of retail businesses and are happy to comply with the rate for our delivery. However, the business model for wholesale distributors in the cannabis industry is much different from retail. On average the margins are a slim 10%. A 7% tax on gross profits would make our business unsustainable. Potential investors that we have pitched our business to have told us that the tax rate is too high in Hayward for them to believe that this is a viable business. If economic development is one of the strategic goals of the city, you would have more applications to open cannabis businesses if the taxes were tiered. I have shared this research by email previously, and it is also attached to this written public comment.
It is no secret that the legal cannabis industry is struggling. Businesses are failing left and right and we are still just struggling to open. An article in the San Jose Spotlight in June of this year highlights the dip in cannabis tax revenue by 13% when it was projected to be much more. The City of San Jose is actively working on easing regulations as they are finding that over taxation and regulation is just making the illicit market stronger. Consumers will go where the prices are better and they can get practically the same product. If you want to combat illicit activity in Hayward, you must make the legal market sustainable for operators and accessible to consumers.
We have poured every resource we have into this business and at this point we just want the opportunity to try. Please help us and consider our request to tier the cannabis tax framework.
Thank you for your time.
Shane Gill
Oakland Cannabis Business Tax Rate
San Francisco Cannabis Business Tax Rate
Santa Rosa Cannabis Business Tax Rate
Sacramento Cannabis Business Tax Rate
San Jose Cannabis Business Tax Rate
“The Cannabis Business Tax was approved by
San Francisco voters on November 6, 2018 and
becomes effective on January 1, 2023. Cannabis
Business Tax rates vary depending on the type of
Cannabis Business Activity and the gross receipts
from such activity attributable to the City.”
Cannabis businesses pay a business tax of 4% of their gross receipts.
Cultivation : 4% of gross receipts
Manufacturing: 3% of gross receipts
Distribution: 2% of gross receipts
Laboratory testing: 0% of gross receipts