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Voters in Grover Beach will decide in November whether the city becomes the first municipality in San Luis Obispo County to tax medical marijuana sales.

With a unanimous decision Monday, the City Council directed staff to move forward with developing an ordinance taxing medical marijuana that will be forwarded to the Board of Supervisors for inclusion on the Nov. 8 ballot. It will come back to the council for final action on Aug. 1.

“This isn’t just about generating revenue. It’s so expensive to regulate,” Grover Beach Mayor John Shoals said, adding that if a tax is adopted much of the revenue generated from it would go toward regulating the growing marijuana industry. “I don’t want everyone to think this is a huge money grab.”

If the city’s proposal to tax 5 percent of medical marijuana sales gross receipts — and 10 percent of recreational marijuana sales gross receipts — was to pass at the polls, it would make Grover Beach the first and only city in the county to tax the drug.

Statewide voters will also decide in November whether to legalize marijuana for recreational use. Under state law, the drug is only legal for medicinal uses.

The city of Santa Barbara also is considering a tax on medical marijuana sales, with the council proposing a 10 percent tax on all gross receipts for medical marijuana businesses and a 20 percent tax for non-medical marijuana businesses, which would become legal if the statewide ballot initiative passes.

Grover Beach currently has no regulations on mobile marijuana dispensaries, and people with proper documentation can grow marijuana under the state’s guidelines without fear of criminal prosecution.

The city, however, does not permit establishment of brick-and-mortar medical marijuana dispensaries.

City staff is in the process of developing a regulatory structure allowing dispensaries, mobile delivery, commercial cultivation, manufacturing and laboratory testing to operate within city limits. The regulations are expected to take four to six months to draft.

Cities that allow commercial cannabis activities can recover costs associated with the process. However, in order to obtain revenue from those activities any tax must first be approved by a majority of the voters and then adopted through an ordinance by the city council.

Activities subject to taxation include cultivation, manufacturing, testing facilities, dispensaries and nurseries.

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