California Weed

Sacramento City Council approves pot tax ballot initiative

A marijuana crop in Grass Valley on November 12, 2015.
A marijuana crop in Grass Valley on November 12, 2015. TNS

Voters in California’s capital city will decide on whether to use tax dollars from marijuana cultivation as a fiscal elixir to pay for services for kids at risk.

The Sacramento City Council voted Tuesday night to advance a June ballot initiative that asks voters to impose a special 5 percent tax on future commercial marijuana cultivation for medical or recreational use.

Long tolerant of medical marijuana businesses, the City Council last week passed broad guidelines that will eventually allow business licenses for commercial cannabis cultivation in city limits.

With specific cultivation rules still to be drafted, the council moved Tuesday night to monetize pot production as a secured revenue source for youth programs.

If the June initiative passes, the council would set guidelines for earmarking funds for programs including early childhood education, arts and cultural activities, academic tutoring, healthy living programs or gang diversion.

City officials said the special tax, which would require two-thirds voter support, could generate $5 million annually. It would replace the normal 4 percent business tax the cultivation operations would otherwise be subject to.

City Councilman Jay Schenirer, who has strongly backed city efforts to license and tax marijuana cultivation facilities, on Tuesday called for that money to support the kind of youth programs he has long championed as a public and private citizen.

The proposed ballot initiative calls for voters to approve a “City of Sacramento Children’s Fund” from tax proceeds on licensed marijuana cultivation facilities. It pledges “to create a funding source dedicated to children and youth services, including homeless and foster youth,” saying the marijuana tax can generate “millions of dollars” for such programs.

“This is the point where the city can walk the talk and actually put some resources into services that young people need,” said Schenirer, who said less than 1 percent of the city’s general fund budget goes to programs for youth. “We can take a tax on a piece of the marijuana (industry) and put that towards a children’s fund.”

Schenirer is a former board member of the Sacramento Children’s Home and helped launch WayUp Sacramento, a healthy foods, nutrition and leadership organization for young people. He regularly solicits major donations for WayUp, based on city filings.

His marijuana tax resolution asserts that the city has “a significant at-risk youth population” with few resources to fund city youth or help private groups working to improve the lives of young people.

He endorsed the pot-funded measure in a pre-meeting press conference that resembled a small campaign event for the ballot initiative. Supportive council members and representatives for children’s support groups wore “Sacramento Children’s Fund” lapel stickers.

Schenirer announced that the Sacramento Association of Realtors had already donated $12,000 for a potential campaign. And mayoral candidate and former state Senate leader Darrell Steinberg, who founded an after-school program called Sacramento Start in 1995, endorsed the special cultivation tax to help fund such programs.

But City Council member Jeff Harris, one of three council members voting ‘no,’ argued that using pot cultivation tax money was a well-intended but misguided attempt at “ballot box budgeting.” He raised the question: “Is a dedicated special use tax on marijuana manufacturing the appropriate method to fund these services?”

Harris argued for adding marijuana cultivation tax revenues to the city’s current $343 million general fund as with the case with other licensed businesses. He said such a move could be passed with a majority vote - not the two-thirds standard for a special tax.

Schenirer’s proposal called for 15 percent of the children’s fund revenues to be used for costs of administration and evaluation of programs supported by the fund. The remaining money would be split, with 30 percent of money going to city departments serving youth and 70 percent to non-profit community groups.

However, Schenirer said in an interview that neither his Way Up Sacramento program nor its non-profit parent group would seek funding from the city due to his involvement.

“People have already come up to me and said, ‘You’re trying to feather your own nest,’” he said. He added: “We will never apply” for city funds.

No specific programs have been identified for funding. But Derrell Roberts, co-founder the Roberts Family Development Center, which offers after-school, preschool, mentoring and counseling programs at seven Sacramento locations, said he is eager to apply for a share of the marijuana cultivation tax proceeds.

“It would allow us to stabilize our funding,” Roberts said.

The tax idea was also heartily endorsed by 17-year-old Jackson Yoder. The member of the Restorative Justice Club at C.K. McClatchy High School asked dozens of young people, many benefitting from after-school and community programs, to stand up before the council.

“This is who we’re arguing for this measure for,” he said.

The debate over how to spend potential marijuana cultivation tax dollars comes as the city is moving cautiously to set operating rules for indoor marijuana cultivation facilities.

The city is drafting operating rules for indoor marijuana cultivation of up to 22,000 square feet per site.

City officials say Sacramento already has numerous unregulated marijuana cultivation facilities, many supplying some of the 30 medical marijuana dispensaries licensed by the city.

Sacramento collected $2.86 million from dispensaries in the 2014-15 fiscal year from a 4 percent medical marijuana tax, which goes to the city’s general fund. However, the unregulated grow rooms pay no fees.

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