Santa Cruz city cannabis tax proposed for tweaks, public vote

The Santa Cruz City Council will consider updating on Tuesday it’s cannabis business tax, a move that will require a vote of the people in the November 8 election to move forward.

The 7 percent cannabis tax, which received a commanding 82 percent support when it first went to voters in November 2014, is a tax whose approximately $300,000 in annual funds are used for general city purposes. The proposed changes are designed to better align the city’s tax with Santa Cruz County’s similar tax and to make small administrative changes reflecting definitions in the state’s three-bill Medical Marijuana Regulation and Safety Act.

“The reason why we’re doing this — if the county hadn’t move to change theirs, we probably wouldn’t have changed ours, either,” Assistant City Manager Tina Shull said. “Since our code is very, very similar, nearly identical to the county’s code, we see a great value in consistency.”

The proposed changes do not otherwise alter the city tax’s business model or what the city allows or regulates when it comes to medical marijuana, Shull said.

A majority of voters’ support on the ballot come November would expand the city tax to include marijuana cultivator sales. However, the city has authorized just two medical marijuana dispensaries to operate and cultivate marijuana within its borders. Those two entities are taxed on marijuana that they are authorized to cultivate when they sell the product to its members. If, however, those two dispensaries sell marijuana they cultivate outside of their membership, such as to a fellow dispensary, then the city also will be able to tax that transaction, under the newly proposed changes.

“The fiscal impact of the revisions is expected to be minimal, at this time,” Shull wrote in her staff report.

In information items sent to the Santa Cruz City Council but otherwise not on the agenda, Deputy City Manager Scott Collins laid out the challenges in enforcing rules applied to taxi drivers on smart phone-based transportation network companies such as Uber and Lyft. Because those nontraditional taxi services are regulated by the California Public Utilities Commission, the city is unable to impose its own regulatory standards. Representatives from local taxi services suggested that the city establish more than one taxi stand in strategic locations, and that city police cite transportation network companies who pick up fares who hail them from the street, instead of through their phones.

Parks and Recreation Superintendent Mauro Garcia also updated the council on its efforts to finalize a Parks Master Plan, which will help control future development of city parks, beaches, facilities and open spaces. As a draft of the planning document is completed, a city-hired consulting firm will conduct a new public survey to help narrow the document’s list of prioritized projects. The council likely will hold a study session on the master plan in November before the city can begin undertaking an environmental analysis that could last six to 12 months, according to Garcia.


What: Santa Cruz City Council.

When: 2:30 p.m., Tuesday.

Where: Santa Cruz City Council Chamber, 809 Center St.

At issue: Consideration of placing modified cannabis tax measure on November ballot.

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