Sacramento will consider taxing recreational marijuana if it is legalized in the state. The City Council agreed on Tuesday to discuss the tax at a future meeting after Councilman Jeff Harris raised the issue.
Earlier in the day, a City Council committee killed a proposal from city manager John Shirey asking voters to impose up to a 10 percent tax on nonmedical marijuana sales, a change that would require voter approval in November.
The current city tax applying to all businesses is 4 percent.
Shirey said he proposed the ordinance now so that the city had the flexibility to adjust taxes if a statewide legalization ballot initiative wins in November. Without the ordinance, the city will have to wait until the June 2018 election to ask for a hike.
“This is money that we need for city services particularly in the police area,” said Shirey. He added that the additional revenue could bolster the general fund, and that the measure is modeled after one local voters passed in 2010 – the last time California considered legalizing retail sales of marijuana.
Councilman Jay Schenirer opposed the proposal, calling it a “good idea at the wrong time.”
Schenirer argued that there had not been enough outreach to the local industry and that the plan lacked council input. He said he would prefer the city to wait and examine the recreational market if it happens before deciding on a tax.
Councilman Eric Guerra also opposed the plan in committee, saying he would like to see more discussion of how tax revenue would be allotted. Saying that his district has the most medical marijuana dispensaries, he expressed interest in carving out a portion of the revenue for neighborhoods that face the heaviest impact from marijuana businesses.
Harris’ request to the City Council means the idea isn’t dead yet, despite the committee vote.
Nate Bradley, executive director of trade group California Cannabis Industry Association, said that many cities across California are considering local taxes on marijuana as its potential for nonmedical use looms. His organization supports “fair taxes” and isn’t opposing the local measure. But if it passes, his organization would lobby local lawmakers to keep the tax on the low end of the scale, preferably around 5 percent, he said.
“We don’t want it to be too high because it will discourage compliance with the new laws, and people will keep using the underground market,” he said.
Bradley also said his organization is closely watching what happens in Sacramento because he considers it a bellwether for the state.
“Sacramento kind of sets the tone for the state because it’s one of the big 10 cities, but it’s also one of the most conservative cities,” he said.
The Council will continue to debate other aspects of marijuana regulation in coming weeks. On August 9, it will hear a plan about an ordinance for cultivation and manufacture that includes options to provide additional funding for impacted neighborhoods. Another regulatory plan could include social justice and environmental mandates.