Riechel Reports - Events - City of San Bruno CA

Council - Cannabis - June 29 2020 - 6:00 p.m. via ZOOM



Article Source:  City of San Bruno CA

“The City with a Heart”

Rico Medina, Mayor

Michael Salazar, Vice Mayor Laura Davis, Councilmember Linda Mason, Councilmember Marty Medina, Councilmember

 

GOVERNOR’S EXECUTIVE ORDER N-25-20****
CORONAVIRUS COVID-19
AND SAN MATEO COUNTY HEALTH DIRECTIVE
FROM MARCH 14, 2020

On March 17, 2020, the Governor of California issued Executive Order N-29-20 suspending certain provisions of the Ralph M. Brown Act in order to allow for local legislative bodies to conduct their meetings telephonically or by other electronic means. Pursuant to the current Shelter-In-Place Order issued by the San Mateo County Health Officer which became effective on March 17, 2020, and which was updated and extended on March 31, 2020; the statewide Shelter-In-Place Order issued by the Governor in Executive Order N-33-20 on March 19, 2020; and the CDC’s social distancing guidelines which discourage large public gatherings, the San Bruno City Council Chambers at the Senior Center is no longer open to the public for meetings of the City Council. Members of the public may view the meeting on a livestream at www.youtube.com/user/cityofsanbruno or on CityNet Services Channel 1. The recorded meeting will be also be made available for viewing on the City’s YouTube channel after the meeting has concluded.

If you would like to make a Public Comment on an item not on the agenda, or comment on a particular agenda item, please email us at councilsb@sanbruno.ca.gov or at mthurman@sanbruno.ca.gov. The length of all emailed comments should be commensurate with the three minutes customarily allowed per speaker, which is approximately 300 words total. Emails received before the special or regular meeting start time will be forwarded to the City Council, posted on the City’s website and will become part of the public record for that meeting. If emailed comments are received after the meeting start time, or after the meeting ends, they will be forwarded to the City Council and filed with the agenda packet becoming part of the public record for that meeting.

Individuals who require special assistance of a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the agenda, agenda packet or other writings that may be distributed at the meeting, should contact Melissa Thurman, City Clerk 48 hours prior to the meeting at (650) 619-7070 or by email at mthurman@sanbruno.ca.gov. Notification in advance of the meeting will enable the City of San Bruno to make reasonable arrangements to ensure accessibility to this meeting, the materials related to it, and your ability to comment.

AGENDA

SAN BRUNO CITY COUNCIL SPECIAL MEETING

June 29, 2020
6:00 p.m.

Zoom Meeting Details:

https://sanbruno-ca-

gov.zoom.us/j/99767024216?pwd=SFJaV3dRa2dxanVia21KOTF2WkY3dz09 
Webinar or Meeting ID: 997 6702 4216 (audio only)

Participant ID: #

Webinar or Meeting Password: 868828

Zoom Phone Line: 1-669-900-9128 (same webinar ID and password as above)

City Council meetings are conducted in accordance with Roberts Rules of Order. All regular Council meetings are recorded and televised on CityNet Services Channel 1 and replayed the following Thursday, at 2:00 pm. In compliance with the Americans with Disabilities Act, individuals requiring reasonable accommodations or appropriate alternative formats for notices, agendas and records for this meeting should notify us 48 hours prior to meeting. Please call the City Clerk’s Office (650) 616-7061, or email your request to Melissa Thurman, City Clerk at mthurman@sanbruno.ca.gov.


City Council Special Meeting Agenda June 29, 2020

Page 2 of 2

1.     CALL TO ORDER

2.     ROLL CALL/PLEDGE OF ALLEGIANCE

3.     PUBLIC COMMENTS FOR ITEMS NOT ON THE AGENDA

Individuals allowed three minutes. It is the Council's policy to refer matters raised in this forum to staff for investigation and/or action where appropriate. The Brown Act prohibits the Council from discussing or acting upon any matter not agendized pursuant to State Law.

4.     STUDY SESSION

a. Provide Direction Regarding a Resolution Submitting a Cannabis Business Tax Measure to the Voters at the November 3, 2020 Election.

5.     ADJOURNMENT - The next Regular City Council Meeting will be held on July 14, 2020 at 7:00 p.m.

Posted Pursuant to Law 06/26/2020


City Council Agenda Item Staff Report

CITY OF SAN BRUNO

 

DATE:          June 29, 2020

TO:              Honorable Mayor and Members of the City Council

FROM:         Marc Zafferano, City Attorney

Jovan D. Grogan, City Manager

SUBJECT: Provide Direction Regarding a Resolution Submitting a Cannabis Business Tax Measure to the Voters at the November 3, 2020 Election

BACKGROUND:

The State of California’s Proposition 64 was adopted on the November 8, 2016 ballot (the Adult Use of Marijuana Act or “AUMA”). The Act provides that:

1.   Recreational cannabis use, possession, transportation, and purchase of specified amounts by adults 21 years or older is legalized, except that certain activities, such as possession or smoking cannabis will still be prohibited in those places otherwise prohibited by state law (such as places of employment) or local ordinance;

2.   Individuals who are 21 years or older are allowed to grow up to six cannabis plants per residence, indoors, for their personal recreational use; and

3.   Commercial non-medical cultivation, processing, laboratory testing, labeling, storing, wholesale distribution and retail sales of cannabis is now controlled, licensed, and taxed by an agency to be designated as the Bureau of Cannabis Control, located within the state Department of Consumer Affairs.

With the approval of Proposition 64, state licenses for commercial non-medical marijuana activities started to be issued on January 2, 2018. Under the new rules, which now refer to marijuana as cannabis, local jurisdictions may regulate, but cannot ban, personal cultivation of up to six (6) cannabis plants within a single private residence. A local jurisdiction may ban or regulate personal outdoor cultivation. Further, a local jurisdiction may ban or regulate all commercial cannabis activities, except for the lawful transportation of cannabis (or cannabis products) on public roads.

San Bruno Municipal Code Chapter 6.58 prohibits all medical marijuana distribution facilities throughout the City. Collective or cooperative cultivation of medical marijuana is also prohibited. When it was adopted in 2011, this ordinance did not apply to any of


Text Box: DISCUSSION:Honorable Mayor and Members of the City Council June 29, 2020

Page 2 of 4

the recreational, personal, or commercial non-medical activities that Proposition 64 later authorized cities to permit.

On October 25, 2016, the City Council unanimously adopted an urgency ordinance to impose a moratorium on the activities authorized by Proposition 64 so that the City could further study its effects and determine if the City should continue to prohibit some or all of these activities, regulate them, and if so, in what manner. On November 22, 2016, the City Council extended the interim ordinance as allowed by state law until October 25, 2017.

On September 12, 2017, the City Council received a staff report about the status of current federal, state, county, and city regulations pertaining to cannabis. After obtaining public input, the City Council directed that staff return with a final extension of the interim ordinance as allowed by state law to October 25, 2018.

On June 26, 2018, the City Council received a staff report, took public input, and directed staff to return with an ordinance banning all commercial cannabis activities in the City as authorized by state law. The City Council requested that staff continue to monitor developments in the area of cannabis regulation, including with respect to testing facilities.

On July 10, 2018, the City Council introduced an ordinance regulating indoor cultivation of cannabis in residences for personal use and only to the extent allowed by state law, and prohibiting the manufacture, processing, laboratory testing, labeling, storing, wholesale and retail sale and distribution of non-medical cannabis throughout the City. The City Council adopted the ordinance on November 27, 2018, which is codified as Chapter 6.59 of the Municipal Code.

On April 28, 2020, the City Council requested that staff obtain information regarding placing a cannabis ballot measure on the November 2020 ballot. Staff has reviewed the activities of other cities in San Mateo County and obtained preliminary information and advice from HdL, a premier consulting firm with deep knowledge and experience in the field of municipal finance, and in particular the tax and revenue implications of cannabis activities. HdL has advised hundreds of cities throughout California, including all of the cities in San Mateo County that have adopted cannabis ballot measures.

On June 2 and June 4, 2020, the City Council discussed various aspects of a cannabis tax measure and cannabis regulations. On June 9, 2020, the City Council directed staff to prepare a resolution placing a cannabis business tax measure on the ballot. The City Council suggested that staff consider the format and structure of successful San Mateo County ballot measures. Staff has consulted with its election experts and outside counsel to develop a proposed measure.


Honorable Mayor and Members of the City Council June 29, 2020

Page 3 of 4

The attached Resolution would submit to the voters at the November 3, 2020 election a proposed cannabis business tax measure modeled on other successful measures. It would also request that the election on the measure be consolidated with the County-administered election on that date, would commit the City to reimbursing the County for its share of election costs associated with the ballot measure, and would take other actions necessary to the placement of a measure before the voters.

The ballot measure would ask the voters to consider adoption of the tax ordinance that is attached to the Resolution. Approval of the measure requires a majority vote of those casting votes on the measure at the election. Submission of this measure to the voters is necessary because new taxes require voter approval. A two-thirds vote of the City Council is required to submit the measure to the voters.

The question proposed for submission to the voters is:

Although no cannabis (marijuana) businesses are currently allowed in the City, shall an ordinance be adopted imposing an additional business license tax of up to 10% of gross receipts on cannabis businesses, until ended by voters, with annual audits and all funds for San Bruno (this tax will generate no revenue initially, but would generate revenue if, in the future, cannabis businesses are permitted or exist in the City)?

The proposed ordinance would impose a 10% tax on the gross receipts generated by any cannabis business activity. The tax would apply in addition to the general business license tax imposed by the City, which varies but is approximately 0.1% of gross receipts.

The proposed ordinance provides that the City Council, without going back to the voters, could amend the ordinance to lower the tax. However, any increase of the rate of the tax to above 10% would require voter approval.

There are alternative tax structures that the City Council could consider, but this proposed measure has the advantage of simplicity. For example, in 2018, Daly City voters adopted a similar measure that sets the maximum tax at 10%. At that time, Daly City prohibited all cannabis business activities, just as San Bruno currently does. The Citys election consultants, who also assisted Daly City in its successful effort, have advised that the City consider a similar measure. More complicated alternatives include measures that impose a different percentage tax depending on the commercial activity. Staff does not recommend the latter approach because there is insufficient information on which to base a decision at this time.

The proposed ordinance would not itself permit or authorize any cannabis businesses activity to operate in the City. It would merely tax such activities if, at some time in the future, the City Council or the voters adopt an ordinance permitting such businesses.

Honorable Mayor and Members of the City Council June 29, 2020

Page 4 of 4

For the November 2020 general election, the City must transmit the ballot measure and associated documents to the County before August 8, 2020. Staff recommends that the final decision be made by the regular City Council meeting on July 28.

FISCAL IMPACT:

The City Council previously authorized expenditures of up to $30,000 for consultant costs to assist in the development of the measure, one informational mailer (estimated at $8,000), and the costs of placing an additional measure on the ballot (estimated at $7,000-$11,000).

Assuming that cannabis business activities would be permitted by ordinance in the future, staff is unable to estimate how much revenue the proposed tax would generate. Given the factors discussed in the June 2, 2020 staff report, there is substantial uncertainty regarding whether any permitted businesses would open, when they might open, how many might open, and how much revenue they would generate.

ALTERNATIVES:

1.     Direct staff to discontinue working on a cannabis tax measure for the November 2020 ballot

2.     Direct staff to revise the proposed ballot measure

RECOMMENDATION:

Provide Direction Regarding a Resolution Submitting a Cannabis Business Tax Measure to the Voters at the November 3, 2020 Election

ATTACHMENTS:

1. Proposed Cannabis Tax Resolution and Ordinance


RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN BRUNO SUBMITTING TO THE VOTERS AT THE NOVEMBER 3, 2020 GENERAL MUNICIPAL ELECTION A CANNABIS BUSINESS TAX MEASURE, REQUESTING THAT SUCH ELECTION BE CONSOLIDATED WITH THE STATEWIDE GENERAL ELECTION HELD ON THAT DATE AND TAKING CERTAIN OTHER ACTIONS

WHEREAS, the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Business & Professions Code Section 26000 et seq.) (the “Act”), as adopted by the voters in 2016 as Proposition 64 and subsequently amended by the legislature, authorized the State to license certain business activities related to cannabis and cannabis products; and

WHEREAS, Section 26200 of the Act provides that the Act does not supersede or limit the authority of local jurisdictions to regulate such cannabis businesses and specifically provides that local jurisdictions may prohibit the establishment or operation of such businesses; and

WHEREAS, the City currently prohibits all cannabis businesses; and

WHEREAS, in the future, the City Council may consider permitting some cannabis businesses to operate in the City; and

WHEREAS, aside from generally applicable business taxes, the City currently does not impose a cannabis business tax; and

WHEREAS, a cannabis business tax requires voter approval to become effective; and

WHEREAS, by prior resolution, the City Council called a general municipal election (the “Election”) for November 3, 2020, to be consolidated with the statewide general election to be held on that same date; and

WHEREAS, the City Council desires to have the matter of a cannabis business tax presented to the voters on the November 3, 2020 ballot.

NOW THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF THE CITY OF SAN BRUNO, CALIFORNIA, AS FOLLOWS:

1.     Pursuant to Government Code Section 53724 and Election Code Section 9222, the City Council directs that the ordinance attached hereto as Exhibit “A” and incorporated herein by reference (the “Ordinance”) be submitted to the qualified voters of the City of San Bruno at the Election.

2.     The question shall appear on the ballot as follows:


Text Box: ATTEST:

Although no cannabis (marijuana) businesses are currently allowed in the City, shall an ordinance be adopted imposing an additional business license tax of up to 10% of gross receipts on cannabis businesses, until ended by voters, with annual audits and all funds for San Bruno (this tax will generate no revenue initially, but would generate revenue if, in the future, cannabis businesses are permitted or exist in the City)?

Yes No

 

This measure must be approved by a majority of the votes cast in order to be adopted.

3.     The City Council hereby directs the City Clerk to transmit a copy of the Measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the Measure, not to exceed 500 words in length, showing the effect of the Measure on the existing law and the operation of the measure, and transmit such impartial analysis to the City Clerk within ten (10) days of the adoption of this Resolution.

4.     Pursuant to Elections Code Section 10403, the City Council requests that the San Mateo County Board of Supervisors consent to consolidation of the Election with the general election to be conducted by the San Mateo County Registrar of voters on November 3, 2020. The election shall be held in all respects as if there were only one election, and only one form of ballot shall be used. The election will be held and conducted in accordance with the provisions of law regulating a special election consolidated with a statewide election. The City will bear all costs customarily charged by the County to a city in connection with a ballot question submitted at a municipal election that is consolidated with an election conducted by the County.

5.     The City Clerk shall certify to the passage and adoption of this Resolution and enter into the book of original Resolutions.

6.     The City Council directs the City Clerk to file a certified copy of this Resolution with the Registrar of Voters of San Mateo County.

PASSED, APPROVED AND ADOPTED THIS __th DAY OF___________ , 2020.

     , Mayor


     , City Clerk


APPROVED AS TO FORM:

MARC ZAFFERANO, City Attorney


ORDINANCE NO. ____

AN ORDINANCE OF THE PEOPLE OF THE CITY OF SAN BRUNO, CALIFORNIA, ADDING CHAPTER 3.18 TO THE SAN BRUNO MUNICPAL CODE, ESTABLISHING A CANNABIS BUSINESS TAX

THE PEOPLE OF CITY OF SAN BRUNO ORDAIN AS FOLLOWS: SECTION 1. Short Title

This Ordinance may be referred to as the “City of San Bruno Cannabis Business Tax Ordinance of 2020.”

SECTION 2. Purpose.

The purpose of this Ordinance is to impose a business tax on cannabis businesses in the City of San Bruno.

SECTION 3. Chapter 3.18 is added to the San Bruno Municipal Code to read as follows: “3.18 CANNABIS BUSINESS TAX

3.18.010 Imposition of Tax. 3.18.020 Cannabis Business. 3.18.030 Use of Funds.

3.18.040 Administration.

3.18.050 No Businesses Authorized

3.18.010 Imposition of Tax.

Every person engaged in a Cannabis Business in the City shall pay a cannabis business tax of 10% of Gross Receipts.

3.18.020 Cannabis Business

A Cannabis Business is a business that is licensed by the state pursuant to the Medicinal and Adult-Use Cannabis Regulation and Safety Act (Business & Professions Code Section 26000 et seq.) and/or involves the retailing, wholesaling, manufacturing, distributing, cultivation or testing of cannabis or cannabis products or involves the operation of a cannabis nursery.

3.18.030 Use of Funds

The purpose of this Chapter is to impose a tax for revenue purposes. Proceeds of the tax shall be deposited in the City’s general fund and available for any municipal purpose.

3.18.040 Administration


Text Box: 	, City ClerkThe tax imposed by this Chapter shall be administered in the same manner as the generally applicable business license tax imposed by Section 3.08.020 of this Code. For purposes of this Chapter, “Gross Receipts” shall have the meaning set forth in Section 3.04.170 of this Code. This tax is in addition to any other tax imposed by the City, including the generally applicable business license tax.

3.18.050          No Business Authorized

This Chapter does not authorize any person to conduct any business or activity in the City.

SECTION 4. This Ordinance may be amended by the City Council in any respect without a vote of the people. Specifically, the City Council may reduce the rate of the tax set forth herein, may create exemptions to the tax, and may create special procedures for the collection of the tax (including, but not limited to, requiring that the tax be paid in advance or that the tax be payable as often as monthly). The City Council may, without a vote of the people, adjust the rate of the tax so long as no cannabis business is subject to a cannabis business tax that is higher than a maximum rate of 10% of Gross Receipts. However, as required by the California Constitution, the City Council may not raise the rate of the tax above that maximum rate unless such increase is approved by the voters.

SECTION 5. If any provision, clause, sentence or paragraph of this Ordinance or the application thereof to any person or circumstance shall be held invalid, such invalidity shall not affect the other provisions of this Ordinance which can be given effect without the invalid provisions or application, and to this end the provision of this Ordinance are declared to be severable.

SECTION 6. If approved by the voters, this ordinance will be effective on March 1, 2021.

Approved by the People of the City of San Bruno at the General Municipal Election Held on November 3, 2020.

       , Mayor

ATTEST:

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