Rancho Cordova passes the dutchie on dispensary tax revenue

California’s legalization initiative sets possible deadline for city to reconsider marijuana stance

This is an extended version of a story that ran in the July 21, 2016, issue.

Rancho Cordova is still saying no to marijuana dispensaries—and the tax dollars generated by their sales.

At the July 5 city council meeting, City Attorney Adam Lindgren submitted a report detailing “significant tax revenue” to elected officials who listened politely then decided to uphold their current prohibition, citing concerns with violating federal law and the drug’s increased potency in recent years.

The issue arose anew because of the Adult Use of Marijuana Act, which will come before California voters in November. If approved, the initiative would allow adults to possess up to 28.5 grams of marijuana for recreational use, and would place a 15 percent tax on the gross receipts of any retail sale, in addition to any other taxes levied by city and county governments.

Sacramento City Councilman Jay Schenirer has proposed tacking on a 3 to 4 percent tax that the council would decide how to spend. A similar proposal fell short on the June ballot.

In Rancho Cordova, medical users must keep grow spaces smaller than 25 square feet. Aside from that, private, indoor cultivation is allowed. Potential growers do have to file a permit, which costs a whopping $600 per square foot, in comparison to—say—Long Beach, which only charges between $15 and $50 per square foot. Maria Kniestedt, a spokeswoman for the city, said there are no permits on file.

Last year, medical marijuana sales in California hit $2.7 billion, according to New Frontiers, a marijuana research organization. And Lindgren’s report stated that Sacramento city made $2.86 million in tax revenue off more than 30 dispensaries, despite taxing their revenue at just four percent.

In 2015, Colorado earned $1 billion in marijuana sales, which translated to $135 million in tax revenue—$35 million of which went to public school construction. However, that pales in comparison to what California is projected to receive if AUMA succeeds. The Department of Finance predicts $1 billion in tax revenue annually.