3/1/2022
City of Huntington Beach
Cannabis Business Tax
Ballot Measures
City Council Meeting
March 1, 2022
Background - City of Huntington Beach
• The City prohibits medical and recreational cannabis activities in the City. • Exception: allowing/regulating non-medical marijuana cultivation per a private residence up to six plants
•As of now, two private parties have filed separate cannabis petitions requesting that the City prepare documents allowing their proposed regulations to be placed before the voters of Huntington Beach for consideration.
• November 3 - Huntington Beach Cannabis Taxation and Regulation Act • December 2 - Huntington Beach Cannabis Regulation & Land Use Measure • Such initiative measures proposing legalization, taxation, and regulation of commercial cannabis businesses in HB were created without City Council or staff input.
March 1, 2022 City Council Meeting
SUPPLEMENTAL
COMMUNICATION
Meeting Date: 3/1/22
1 Agenda Item No.: 24(22-142)
3/1/2022
Background - Continued
• On December 21, 2021 Study Session, the City Council formed an ad-hoc subcommittee to further assess, research and present a balanced cannabis regulation framework for the Council's consideration.
• An Ad-hoc subcommittee of 3 City Council members consisting of City Council members Bolton, Kalmick, and Peterson, was formed. The subcommittee met twice to deliberate key policy areas and make recommendations. • On February 15, 2022 Study Session, the City Council held to discuss the recommendations by the subcommittee and deliberated next steps.
March 1, 2022 City Council Meeting
Special Tax vs. General Tax
June 7, 2022 Primary Election Ballot as a Special Tax
• Requires 2/3 votes of the electorate
• Tax Revenue must be deposited into a separate fund only be used for specific purposes. Proposed purposes are:
1. Police services and;
2. Behavioral health and homeless prevention & intervention services • Estimated election cost: appx. $317,000 to $450,000 per the OC Registrar of Voters based on the number of registered voters. The final cost will depend on the total # of entities placing items on the ballot, etc.
March 1, 2022 City Council Meeting
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Special Tax vs. General Tax
November 8, 2022 General Election Ballot as a General Tax • Requires a majority of the electorate
• Tax Revenues will be used for general municipal services • Estimated election cost: appx. $8,500 to $25,500 depending on the # of ballot pages required as the City is committed to the upcoming City Council and City Attorney elections
• A Resolution calling for a general tax to be placed on a general municipal election - requires 2/3 of the City Council votes.
March 1, 2022 City Council Meeting
Proposed Tax Rates
• Up to 6% for retailers (storefront, delivery and both); and • Up to 1% for other cannabis businesses (non-retailers including but not Limited to indoor cultivation, manufacturing, testing lab, and distribution); and
• Allowing flexibility for the City Council to adjust tax rates up to a maximum voter-approved rate for each type of cannabis businesses to address yet emerging economic market conditions
March 1, 2022 City Council Meeting
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City of Huntington Beach -
Cannabis Business Tax Measure - Special Tax
"Shall the City adopt a special tax measure of up to 6% of gross receipts on cannabis retailers and up to 1% of gross YES receipts on all other cannabis businesses, which is expected to generate an estimated $300,000 to $600,000 annually for the specific purposes of funding police and homeless and NO behavioral health services, and levied until terminated by voters?
March 1, 2022 City Council Meeting
Timeline for June Election as Special Tax
• March 11, 2022: Submit Direct Argument
• March 11, 2022: Submit an Impartial Analysis of the Measure by CAO • March 21, 2022: Submit Rebuttal Argument
• Council as a whole, or any member of members authorized by the City Council may submit ballot arguments, for or against the measure pursuant to Elections Code section 9281 & 9282. • Council can designate from this body less than a quorum to draft and submit a direct argument supporting the measure.
• In the event such a Council authorized argument is not prepared, individual voters (including Council Members) can submit an argument, and a priority is set forth by Election Code Section 9287 to be applied by the City Clerk in selecting the ballot argument to use.
March 1, 2022 City Council Meeting
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Recommended Actions:
If the City Council wishes to put a tax ballot measure before voters in June as a special tax:
A) Adopt Resolution No. 2022-07, calling for a Special Election to place a special tax measure on the June 7, 2022 Statewide Primary election ballot; and, Direct staff to schedule a future meeting date at which the City Council can further consider the implications of various unresolved policy/regulatory matters associated with cannabis, after which time the City Attorney can prepare and return to the City Council for its consideration, a regulatory ordinance regarding cannabis regulations for City Council adoption or voter approval; and
C) Authorize a General Fund appropriation of up to $450,000 for the OC Registrar of Voters to cover all associated election costs related to placing the measure on the June 7, 2022 ballot; and D) Designate from this body less than a quorum to draft and submit a direct argument supporting PUHTNGTOR the measure.
March 1, 2022 City Council Meeting
Recommended Actions:
If the City Council wishes to put a tax measure before voters in November as a general tax:
1) Direct staff to return to the City Council with a resolution to place a cannabis tax meaure on the November ballot; and,
2) Direct staff to schedule a future meeting date at which the City Council can further consider the implications of various unresolved policy/regulatory matters associated with cannabis, after which time the City Attorney can prepare and return to the City Council for its consideration, a regulatory ordinance regarding cannabis regulations for City Council adoption or voter approval.
If this option is selected, the cost of election will be budgeted in the FY2022-23 budget.
A HUNTINGTOR
March 1, 2022 City Council Meeting 10
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HU 000000000 NGTON
INCORPORATED
BEACH
QUESTIONS?
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