High cost of doing business?
CANNABIS TAX PLAN SET FOR JUNE 5 VOTE
EL CENTRO — A series of taxes on the local cannabis industry will be up for county voter approval June 5. The Imperial County Board of Supervisors on Tuesday approved a resolution to establish general taxes on the developing industry. The proposed taxes are 8 percent on retail sales, a 5 percent tax on the gross revenue in manufacturing and a land tax for cultivation facilities. As proposed, the land tax would start at $15 per square foot as of Jan. 1, and then rise to $20 per square foot in 2020 and $25 in 2022.
Since the intent is to pass a general tax, the revenue generated would be placed under the county’s general fund and can be spent for unrestricted general revenue purposes.
Although the county had the option to put in place an excise tax for a specific use, the idea was not deemed appropriate by the ad hoc committee led by Supervisor Luis Plancarte. That’s because an excise tax would have required a twothirds majority vote to be adopted rather than the simple majority required for a general tax.
Concerns
Planning and Development Director Jim Minnick told the board during the meeting that some have expressed concerns to him over the land tax rising to $25 per square foot in four years.
He said interested applicants are concerned that as the availability of the product increases, its value may decrease, making the land tax a bit too high, which they believe could be detrimental for the development of the industry in the Imperial Valley.
Minnick said that fee has made some investors anxious and noted the rest of the fees have not been seen as an issue.
“The majority of what we’ve been hearing is that $25 is exceedingly expensive,” Minnick said. “Some (jurisdictions) have as high as $25. The feedback that we are getting is that the $25 is in excess of the ability to sustain their company.”
Under the County’s guidelines, no cultivation facility should exceed 22,000 square feet.
A facility of that size would pay a total of $330,000 for the land tax next year.
Starting in 2020, that number would go up to $440,000 and would cap at
$550,000 by 2022.
Update on applications
Last year, the board approved issuing up to five licenses for virtual retail of cannabis with delivery service, up to five licenses for wholesale distribution operations and a single medical marijuana storefront with a delivery operation.
Minnick told the board the county received 26 license applications during the application period. He said the county received 10 applications for a medicinal marijuana facility, seven for virtual retail licenses and six for wholesale distribution.
A lottery process is expected to take place in March to determine which of the applicants will move forward.
In order to take part in the lottery process, an application needs to be found complete and consistent with county and state regulations pertaining to zoning, site control and financial ability.
Those selected in the lottery will move forward in the application process but still will need to meet all established requirements before the issuance of a license.
Another concern raised by some applicants is that although the county will approve the virtual retail sale of recreational marijuana, no local city currently allows it, therefore putting the industry in uncharted territory.
Minnick told the board that by banning retail sales of cannabis within their jurisdiction, cities also effectively banned the delivery of cannabis.
Minnick said these virtual dispensaries will have to find a way to deliver to a physical address within the unincorporated areas of the county to avoid breaking the law. The county last year voted not to allow physical recreational marijuana dispensaries.
“Our statement (to applicants) would be that you can only deliver where you legally are allowed to deliver pursuant to state regulations,” Minnick said.
Despite the concerns, the board voted unanimously to approve the resolution, and the fate of the proposed taxes rests with voters.