Agenda Item Wording:
title
Survey Findings Update on Potential Cannabis Tax - Receive the staff report and survey findings presentation from FM3 Research on a potential local cannabis tax measure that Council could choose to include on the November 2024 ballot and provide additional direction as appropriate.
body
Deadline for Action: 5/6/2024
Submitting Department: Community Development
Contact Name and Phone Number:
Devon Jones, Economic Development Manager, devon.jones@visalia.city <mailto:devon.jones@visalia.city>, (559) 713-4190
Department Recommendation:
Staff recommends the City Council:
1. Receive the staff report and survey findings presentation from FM3 Research and provide staff with any input, and
2. Authorize staff to continue working with HdL Companies to develop local cannabis tax measure and ballot language to be included on the November 2024 ballot, and
3. Appropriate $20,000 from the general fund for the development of tax measure informational materials.
Summary:
FM3 Research was hired to conduct a public opinion survey of Visalia registered voters to assess voter attitude towards a potential measure to tax cannabis businesses, if such businesses were allowed to operate within Visalia’s jurisdiction. FM3 Research’s presentation, which is attached to this report, provides a detailed overview of their findings.
Background Discussion:
Senate Bill (SB) 1186, the “Medicinal Cannabis Patients’ Right of Access Act” was signed into law in late 2022. This state law, which became effective on January 1, 2024, prohibits local agencies from enforcing any local regulations that prohibit the retail sale by delivery of medicinal cannabis. After this date, “delivery only” (i.e., delivery of medicinal cannabis) businesses can be permitted, subject to reasonable zoning regulations for public health and safety, within the City of Visalia. This means that warehouse-based businesses could legally operate in the City of Visalia as long as they sold medicinal cannabis via delivery only (i.e., no retail store front).
As a result of SB 1186, the City Council on July 17, 2023, authorized staff to initiate municipal ordinance updates to implement reasonable business and zoning regulations in response to SB 1186. On November 20, 2023, Council conducted the second reading and adoption of Ordinance No. 2023-13 for Zoning Text Amendment No. 2023-02, amending several provisions in the municipal code including Title 5, 8, and 17, which address state mandated changes for “delivery only” medicinal cannabis businesses. To date, staff have received inquiries from businesses seeking to operate in Visalia under the provisions of SB 1186, but none of them have initiated the process of establishing their business operations in the community. In addition, staff has also received numerous inquiries from business operators seeking to operate storefront retail cannabis businesses, which are not permitted to operate in Visalia under the current municipal code regulations.
Also on July 17, 2023, Council authorized staff to hire a consultant through a sole source contract process to assist staff with the preparation of a potential local sales tax measure specifically for cannabis sales for the 2024 general election and to identify potential revisions to cannabis regulations in Visalia so the City would be ready in the event additional state mandates were enacted that would prevent local agencies from restricting other types of cannabis businesses from operating in their local jurisdiction, and/or should the Council later determine to allow such cannabis businesses. Please note applicable local taxes can be charged under SB 1186, but no specific excise tax for cannabis currently exists within the city. At this time, should any applicable delivery-only medicinal cannabis operators open in the city, only the normal business license fees and general sales tax would apply. The local tax measure would not be proposing to legalize other types of cannabis sales, the tax would only authorize the City of Visalia to collect additional tax revenue from cannabis sales that state law has authorized to be conducted in Visalia or if the City Council, at a later date, decided to allow cannabis sales.
On November 6, 2023, Council authorized the City Manager to award a contract to HdL Companies for an amount not to exceed $35,000, with a total budget of $40,000, and a contract to Fairbank, Maslin, Maullin, Metz & Associates (FM3 Research) for an amount not to exceed $39,500, with a total budget of $45,000, and appropriate $85,000 from the General Fund. HdL Companies is tasked specifically with development of the cannabis tax measure, including preparation of the ballot resolution, revenue estimates, and assistance with the ballot statement. They will also assist with drafting the regulatory framework should the State mandate local agencies to permit other types of cannabis businesses or should the Council desire, at a later, to consider permitting such businesses.
Fiscal Impact: $20,000 from the general fund for the development of tax measure informational materials.
Prior Council Action:
On November 6, 2023, the City Council authorized the City Manager to award a contract to FM3 Research for an amount not to exceed $39,500, with a total budget of $45,000.
Other: None
Alternatives: Per Council direction
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to:
1. Receive the staff report and survey findings presentation from FM3 Research, and
2. Authorize staff to continue working with HdL Companies to develop local cannabis tax measure and ballot language to be included on the November 2024 ballot, and
3. Appropriate $20,000 from the general fund for the development of tax measure informational materials.
end
Environmental Assessment Status:
No environmental assessment required at this time.
CEQA Review:
No environmental assessment required at this time.
Attachments:
1. Visalia Cannabis Survey Analysis