PG, Monterey to consider pot measures
Questions of cannabis are going before Monterey Peninsula voters in the Nov. 8 general election as the cities of Pacific Grove and Monterey consider measures to regulate — or even just allow — the product's sale within city limits.
Pacific Grove
While commercial cannabis is already well on its way to Monterey, Pacific Grove is bringing the decision of whether to give cannabis retail the go-ahead straight to voters this fall.
One of two cannabis propositions on the ballot for Pacific Grove residents, Measure M asks if the city's municipal code should be amended to allow retail sales of medical or recreational cannabis, limited to one location citywide. The second, Measure N, calls for an excise tax on the sale or delivery of cannabis and cannabis products, including hemp, not to exceed 6% of gross sales.
The pair of cannabis measures are the city's latest attempt to gauge local temperament for a Pacific Grove-based pot dispensary, a matter that's been up for debate for years.
In September 2020, the Pacific Grove City Council OK'd an ordinance allowing a single dispensary to operate in the city. Yet shortly after, residents dissatisfied with Pacific Grove's level of community engagement pushed back with a petition that sought a referendum to
overturn the approved ordinance. Though the petition failed by three votes, the City Council still opted to rescind the original 4-3 decision that allowed for a Pacific Grove cannabis shop.
Tempered by community controversy, the City Council decided in an April meeting to move forward from 2020's failed ordinance with a new process of collecting public opinion before taking any further action on the issue. Action taken this spring prompted staff to prepare both an advisory and implementing measure for the November ballot that would ultimately give a thumbs up to the sale of recreational and medicinal cannabis in Pacific Grove.
Still, if given the stamp of approval in November, the measures would be only a start to policy change, eliciting city officials to flesh out details through future public outreach. Measure M in particular is just a matter of weighing public opinion. A “yes” on the non-binding proposition merely indicates support for cannabis sales and businesses in Pacific Grove, subject to certain geographic limitations, but does not implicate the City Council to take action based on election results. Likewise, a “no” on Measure M is a signal to keep the status quo.
An impartial analysis of Measure M prepared by Pacific Grove City Attorney Brian Pierik clarifies that existing city regulations prohibit the sale of cannabis and cannabis businesses in the city. Any change to authorize such businesses would require subsequent action by the City Council in a public process, including action to amend Pacific Grove's current municipal code.
Opponents of Measure M say bringing a pot dispensary to Pacific Grove would negatively impact the city in three ways: by creating blight and hurting small businesses, giving way to a local monopoly that council members can wield to maintain political power, and making it easier for the city's youngest to purchase cannabis.
But supporters argue the demand for cannabis exists both within and outside the local community, so Pacific Grove has a responsibility “to allow a safe and convenient way to purchase cannabis products within city limits.” Advocates also point to the possibility of cannabis retail becoming a new source of city revenue, as laid out in the city's accompanying implementing measure.
Measure N asks “shall an ordinance be adopted establishing a City excise tax on cannabis businesses (which includes hemp) at an annual rate not to exceed 6% of gross receipts for retail and delivery cannabis businesses, which is expected to generate an estimated $300,000 annually and will be levied until repealed by the voters?” Revenue accrued from cannabis sales would, in turn, help fund general municipal expenses such as police, fire, roads and recreation, and for unrestricted general fund purposes.
A “yes” vote on Measure N would adopt the cannabis business tax, while a “no” vote wouldn't see any new excise tax imposed.
Again, like Pacific Grove's advisory measure, the proposed cannabis business tax will take some time to come to fruition if passed. A simple majority, more than 50% of the vote, is needed to pass either measure.
When the measures were up for initial City Council consideration in April, Councilman Chaps Poduri said the tax could conceivably go into effect three months after passing, but Pacific Grove wouldn't have a dispensary for assessing the tax at that point. Rather, he estimated “all of this won't come into play for at least another year.”
The city attorney's impartial analysis of the suggested tax explains that it does not permit any cannabis businesses to operate in Pacific Grove, but that if the city's municipal code is later changed — motivated by an approved Measure M — only the added dispensary would be taxed, leaving those who purchase or acquire cannabis for personal use unaffected.
Proponents of Measure N contend a cannabis retail store is a state-licensed business that creates jobs, pays taxes and bolsters city services. The opposition, however, says that based on Pacific Grove's adopted budget for the 2022-23 fiscal year, which anticipates more than $46 million in revenues for the city, $300,000 from a cannabis business tax would only increase the city revenue by 0.65%. That boost, they argue, is not worth the perceived costs of bringing a pot dispensary to Pacific Grove.
Monterey
Talks of taxing cannabis sales are also on the ballot for nearby Peninsula neighbors.
Monterey voters will decide on Measure J, which proposes an annual cannabis business license tax for stores operating within their city.
Measure J asks whether the city of Monterey should “impose an annual cannabis (marijuana) business license tax of up to 8% gross receipts from retail businesses, 2% of gross receipts from testing laboratories, and 6% of gross receipts from other cannabis businesses?” Apart from business tax rates, the measure would also allow higher taxes on cannabis-infused beverages containing natural or artificial sweeteners and high-potency products.
If adopted, the city could gain as much as $1.3 million annually from the tax, it estimates, with all funds staying local.
The potential of a cannabis retail tax in Monterey has been in the works since December when the Monterey City Council gave staff the initial OK to put together draft language for the policy. At the same December meeting, the City Council directed staff to develop a regulatory ordinance that would ultimately allow for a total of three retail cannabis establishments throughout the city.
Establishing a cannabis business tax is Monterey's next step for allowing the product commercially, as laid out in its Commercial Cannabis Roadmap. Launched in the winter of 2020, the roadmap is a multi-year plan laid out to guide the process of permitting and regulating commercial cannabis operations in the city. Monterey is currently operating in Step 3 of its cannabis retail rollout: “Prepare to Launch,” which involves amendment of the city municipal code to allow for cannabis retail permits, cannabis retailer selection and development of a cannabis revenue strategy.
Should more than 50%, or a simple majority, of voters support Measure J, Hdl Companies estimates that, collectively, the tax could generate the city anywhere from $604,000 to $1.3 million a year. The numbers are based on the low end of tax rates proposed — 4% for retailers, 1% for testing labs and 6% of other industry-related businesses — collecting revenue from three storefront dispensaries and one cannabis testing laboratory. To the city's immediate monetary benefit, the latter is already open for clients.
A “yes” vite on Measure J supports imposing the tax. A “no” vote opposes it.
Impartial analysis of Measure J prepared by Monterey City Attorney Christine Davi says it is “a general tax to raise money for city services, including police and fire, street maintenance, library, parks and recreation, and other general services for residents and other community members” and that the City Council will review and approve all spending.
Results from the fall's general election will determine how Monterey navigates its Cannabis Roadmap into next year. After imposing a cannabis business tax, the plan would enter into Step 4, or “Launch!” — meaning the city would begin issuing permits and determining market demand.
More information about measures on the November ballot for Monterey, Pacific Grove and other cities across Monterey County can be found at https:// www.montereycountyelections.us/11082022-local-ballot-measures/.