The West Hollywood City Council will consider on Monday putting a proposal for a cannabis sales tax on the March 5, 2019 ballot.
The proposed 7.5% tax on recreational cannabis would boost the overall tax to 30% and is projected to raise $5.5 million year. A memo from City Hall says the money could be used to fund services “such as public safety, street repair, homeless services, pedestrian/bike safety, and parks …”
If approved by West Hollywood voters, that tax would be in addition to a 7.5% state sales tax and a 15% state excise tax. There is no sales tax levied on medical cannabis.
The City Hall memo states that the estimated $5.5 million in revenue “is based on approximately 18 adult-use cannabis businesses operating in the city which generate on average approximately $4,000,000 in gross receipts from adult-use cannabis sales each year; which would generate $72 million in gross receipts.
“The city will issue a total of 32 cannabis licenses for the sale of adult-use cannabis in some form (8 adult- use retail licenses, 8 consumption lounge (smoking, vaping, edibles) licenses, 8 consumption lounge (edibles only) licenses, and 8 delivery licenses). The city anticipates that some applicants may receive more than one type of license for a single location, which is why only 18 locations were estimated.”
Earlier this year the city engaged Fairbank, Maslin, Maullin, Metz & Associations to survey local residents as to their opinion of a city cannabis tax. When asked if they would support a 7.5% tax “to fund general municipal service such as Sheriffs, street repair, parks, and homeless services, until ended by voters and requiring annual independent financial audits” 75% of those responding said “yes” and 52% said “definitely yes.” Those responding “no” were 22% and those who said “definitely no” totaled 15%). Four percent were unsure.
A proposed 5% tax got less support, with 67% saying “yes” and 43% saying “definitely yes.” Those saying “no” were 26% and those saying “definitely no” equaled 18%.
When asked what they most supported using the money for, 82% said “ensuring safe and clean public areas,” 79% said “expanding city efforts to address homelessness,” and 77% said “repairing potholes.”
In order to be placed on the March 5 ballot, the City Council must approve the ballot measure in a vote of at least four to one. Approval will require a majority of city voters.
State and local taxes applied after the passage in November 2016 of Prop 64, which legalized recreational cannabis in California, have boosted the cost of cannabis significantly, leading some to worry that it will promote the illegal cannabis business.
The City Council meets at 6:30 p.m. Monday at the City Council Chambers, 625 N. San Vicente Blvd., south of Santa Monica. Parking is free in the five-story structure behind the Council Chambers with a ticket validated in the lobby.