Hayward and San Leandro voters will decide whether to tax marijuana sales in their cities if recreational use is legalized in California.

Both councils agreed to put the proposed taxes on the November ballot to collect the potential revenue as soon as possible.

Also on the ballot is Proposition 64, which would legalize the adult use of recreational marijuana.

At its July 19 meeting, the Hayward City Council agreed unanimously to let voters decide whether to add a tax of up to 15 percent tax on gross medical and recreational cannabis sales if Proposition 64 passes.

Marijuana businesses, as well as sales, are currently prohibited in Hayward.

“One of the things that we’ll be able to see after that is what the vote is in Hayward … and if they decidedly passed it, then we may really want to look at changing some of the policies that we’ve had in the past to keep any cannabis from being sold in our city,” Mayor Barbara Halliday said.

If approved by voters, the city’s tax would be added on top of any state taxes for marijuana use and apply to cultivation, distribution, manufacturing and business-to-business transactions.

Sending the tax proposal to voters in November will cost about $258,000, Hayward City Clerk Miriam Lens said. But otherwise, Hayward leaders would have to either hold a more expensive special election next year or wait until the 2018 election, said Hayward city attorney Michael Lawson.

The Hayward council’s decision came just one day after San Leandro leaders voted to send a marijuana business tax measure to voters.

That measure, requiring all cannabis businesses to pay an annual tax of up to 10 percent or $100 for each $1,000 of gross receipts, was unanimously approved by the San Leandro City Council at its July 18 meeting. The seven-member board also set aside $65,000 for public outreach.

The proposed business tax could generate up to $500,000 annually for city coffers, if the rate is set between 5 to 7 percent, Deputy City Manager Eric Engelbart said.

“We don’t necessarily envision this being set at 10 percent initially,” Engelbart told the city council.

“For comparison purposes, the cities of San Jose and Santa Cruz have a similar measure that their voters passed allowing up to 10 percent but they currently impose it at 7 percent,” he said.

Former San Leandro mayor Stephen Cassidy said tax revenues from marijuana sales should be dedicated to social services and art initiatives instead of deposited in the city’s general fund.

“If you dedicate it, you can come back 20 years from now and say, ‘Wow, we did that, we did that and we did that in our community because we were courageous and decided to dedicate the medical marijuana tax for those specific programs,’ ” he told the council.

At the same meeting, the council issued the city’s second medical marijuana dispensary permit to the Davis Street Wellness Center. The 5-2 decision to issue the permit to the nonprofit — instead of Blum Oakland — was opposed by councilmen Benny Lee and Lee Thomas.

San Leandro voters will also consider two other tax measures in November.

One is a modified business license tax that could generate up to $800,000 annually and is intended to reduce fees for about 2,300 small businesses citywide with up to three employees, Engelbart said.

Warehouse and distribution businesses, such as moving and furniture firms, would be taxed at $100 per 1,000 square feet of space.

Parking lot businesses would be taxed at a rate equal to no more than 10 percent of gross receipts.

“The idea behind both of these is to align the tax rates for those types of businesses based upon the impact they’re having on city services,” Engelbart said.

The other ballot measure seeks to raise the city’s hotel tax from 10 to 14 percent. That could generate $200,000 in additional revenue annually, Engelbart said.



Founder & CEO of 420 College.

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