The Sacramento County Board of Supervisors on July 12 reviewed a proposed ballot measure that would have voters decide whether their county should tax cannabis and hemp businesses if they are allowed to operate on unincorporated county land.
Within Sacramento County, cannabis businesses such as dispensaries and distributors are only allowed in the cities of Sacramento and Isleton.
County supervisors voted 3-2 to place the measure on the November 2022 ballot. At least four votes were needed for that measure to move forward.
Supervisors Sue Frost and Don Nottoli cast the dissenting votes. Frost argued that it’s unfair for residents in the county’s cities to vote on a measure that would only affect those living in unincorporated communities.
“I’m torn, but eventually I’m going to object,” she said. “I’m concerned that the strong majority of the unincorporated county could oppose it, and still pass it, and ultimately it’s due to two-thirds of the voters (in the cities).”
Although the commercial sale and cultivation of cannabis remains illegal in Elk Grove, that city still borders unincorporated communities such as Wilton, Vintage Park, Vineyard and Franklin.
County supervisors and staff stressed at the July 12 meeting that the tax measure would not legalize cannabis businesses in unincorporated communities. That change would require separate action by the county board.
“We’re not legalizing or (legalizing) dispensaries today, what we’re doing today has absolutely nothing to do with that,” Supervisor Patrick Kennedy said.
Proponents of the county’s cannabis tax argued that the county could collect millions in tax revenue from cannabis sales.
Supervisor Phil Serna said county facilities and streets could benefit from such taxes, as well as programs that address mental health and homelessness.
“It’s important to understand the revenue potential that we could benefit from, that the constituents that we represent could benefit from,” he said.
Serna also mentioned that her mother used cannabis to ease her pain while battling cancer.
“I still believe very strongly that cannabis has valid medicinal and health benefits,” he said.
In a report prepared by the firm HdL Companies, they told county supervisors that there are more than 300 licensed cannabis businesses in the city of Sacramento. That city generated more than $20 million in cannabis taxes during the 2020-21 fiscal year, HdL reported. The city of Sacramento applies a 4% tax rate on all cannabis businesses.
HdL staff estimated the county could generate $5 million to $8 million annually from licensed cannabis businesses in unincorporated areas.
Supervisor Rich Desmond supported the tax measure and said the city of Sacramento currently receives the largest share of cannabis tax revenue in the county. He noted that sales of cannabis products are abundant in unincorporated communities.
“People who don’t accept that or recognize that they’re not accepting reality,” Desmond said. “It’s everywhere and all the tax revenue goes to the city of Sacramento.… Not only are we leaving money on the table, but we’re leaving another municipality to make all the decisions about how tax money is spent on something. that’s happening with the unincorporated county, and I have a big problem with that.”
Kennedy echoed his colleague’s comments about potential tax revenue.
“We have to look at every possible source of revenue to meet the needs of this county,” he said. “Our costs are going up; our needs are increasing. To walk away from something that’s there and let other jurisdictions benefit from it is crazy … It’s good for the people of Sacramento (County), and it’s not going to encourage or discourage cannabis use in any way.”
The proposed tax measure did not specify where the council would spend the proceeds from the cannabis tax.
During the public comment period of the board’s hearing, Sarah-Michael Gaston, who is the deputy director of the nonprofit Youth Forward, asked the board to direct the proceeds to substance use prevention and public health programs. He also said the county should apply higher taxes to cannabis products that have high levels of THC, which affects the user’s mental state.
“The cannabis industry is aggressively marketing cannabis as a curative health product through billboards and online ads,” Gaston said. “Cannabis ads often use cartoon images and young models to sell products.”
Nottoli, who represents the communities of Elk Grove, Wilton and Galt in District 5, said he was unconvinced by arguments that the county could raise millions from cannabis and hemp taxes. The board president said that’s just speculation.
“It’s not always about the revenue, and people can argue that we’re leaving a lot on the table, but that’s the whole perspective,” Nottoli said.
He then cast the final vote that defeated the proposed tax measure.
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