Sacramento officials are offering a preview of how much it will cost to regulate a locally permitted marijuana industry and just how big the pot trade may become in the capital city.
A staff report prepared for Tuesday’s session of the City Council’s Budget and Audit Committee estimates that Sacramento will need to raise $6.3 million in annual permit fees on cannabis business in order to pay for new staff positions and policing to govern the marijuana industry and address its impacts locally.
Officials say 900 individuals have contacted the city, expressing interest in starting marijuana businesses under state medical marijuana regulations signed into law by Gov. Jerry Brown in 2015 and the recent voter-approved Proposition 64 recreational marijuana initiative.
Many of the applicants won’t be eligible for marijuana business permits if the ventures aren’t located in areas deemed appropriate. Recent city legislation to permit commercial marijuana cultivation businesses requires that they operate in industrial zones, warehouse districts and limited commercial areas, with the businesses screened from public view and more than 600 feet from schools. The city’s staff is working on additional criteria to screen would-be applicants.
In addition to plans to set permit fees on the businesses, the City Council recently approved a plan asking commercial marijuana cultivators to pay into a “neighborhood responsibility fund” to offset impacts and support community programs.
Sacramento has 30 locally permitted medical marijuana dispensaries, which pay the city $4 million in annual taxes.
The staff report says the city expects to license more than 260 additional cannabis businesses, including 200 commercial marijuana-cultivation businesses, 30 marijuana delivery businesses (on top of deliveries allowed by the 30 dispensaries), 25 cannabis product manufacturing businesses, four cannabis testing labs and five cannabis transportation businesses.
The regulation effort, the report says, would likely involve 54 staff members in multiple department, including 32 new full-time hires at a cost of $5.4 million. Positions would include four police sergeants, 12 police officers, two fire inspection officers, one animal control officer, four building inspectors, four code enforcement officers, a senior deputy attorney, a customer service representative and others.
The Budget and Audit Committee is expected to review proposed annual permit fees, ranging from $8,240 for commercial cultivators with no more than 5,000 square feet of plants to $24,630 for growers with up to 22,000 square feet. Fees of up to $20,160 are proposed for marijuana delivery businesses and up to $41,570 for commercial transportation companies.
The City Council is expected to vote on the fees on Feb. 28.