LEMON GROVE TO LEVY 5% TAX ON POT SHOPS

Lemon Grove, a city struggling financially, hopes to earn as much as $350,000 next year from the sale of medical cannabis — with the possibility of doubling that total in future years.

The Lemon Grove City Council on Tuesday unanimously agreed to impose a 5 percent gross retail sales tax rate on cannabis stores in the city. That is 1 percent higher than in neighboring La Mesa, but less than in the cities of San Diego (8 percent) and Chula Vista (7 percent).

The tax collected by Lemon Grove will be from the sales receipts of the medical marijuana businesses, not a tax on the stores’ customers.

“I think nobody said this is going to save Lemon Grove, but it is a reasonable tax that could help Lemon Grove,” said newly sworn in

City Councilman George Gastil.

Lemon Grove voters in November passed Measure J approving the tax, which will start being imposed Jan. 1. Businesses will be required to pay the tax on a monthly basis, with late penalties assessed, if necessary.

The $350,000 ref lects tax earnings from two medical marijuana dispensaries in the city. While only one legal cannabis store is currently operating in Lemon Grove — The Boulevard Dispensary, on Federal Boulevard — a second store, tentatively called Well Greens, which will also be on Federal Boulevard, is currently in build mode and could be up as soon as the first three months of 2021, City Manager Lydia Romero said.

The city, less than four square miles in size, will likely max out on dispensaries at four, because of language written into Measure V, passed by voters in 2016. That measure stipulates that dispensaries have to be more than 1,000 feet from one another, as well as 1,000 feet away from any protected uses, including public or private preschools and schools, licensed day care facilities, any park or playground, and alcohol and substance abuse treatment centers.

Administrative Services Director Molly Brennan told the City Council that the retail sales tax rate will be revisited when they work on the Lemon Grove budget in the spring of 2021, allowing an adjustment for rates in 2022 at that time.

While the city does not knowingly have any illegal dispensaries currently in operation, the City Council agreed with Brennan that illegal cannabis operations would also be subject to taxing.