$400 million increase over current year’s budget

By Dan Borsuk

Contra Costa voters could see a cannabis industry tax measure on the November 6 ballot after supervisors on Tuesday thrashed through statistics and ideas on what route to take in complying with the 2016 passage of state Proposition 64.

Determined to assemble a cannabis tax ordinance by an August 10 deadline in order to file a tax measure ballot for the November election, supervisors, under the guidance of Julie Enea of the County Administrator’s Office, presented a cannabis business tax levy proposal assembled by HdL, the Crescent City-based consulting firm hired by the county to assist the county in developing an ordinance in the aftermath of the passage of Proposition 64, the 2016 state initiative that legalized the sale of recreational marijuana.

The proposed cannabis business tax levy sets initial and maximum rates for eight license types.  Those proposed rates are:

• Cultivator: Indoor, artificial lighting:  7/ft. initial rate, $10/ft. maximum rate.
• Cultivator: Greenhouse, mixed lighting:  $4/ft initial rate, $7/ft. maximum rate.
• Cultivator: Outdoor, natural light:  $2 ft. initial rate, $4 ft. maximum rate.
• Cultivator Nursery: $1/ft. initial rate:  $2/ft. maximum rates.
• Manufacturer/Non-retail microbusiness: 2.5 % of gross receipts initial rate, 4% of gross receipts maximum rate.
• Testing: Not Available; initial rate:  2.5% percent of gross receipts maximum rate.
• Distribution: 2% of gross receipts initial rate; percent maximum rate.
• Retailer/Retail microbusiness: 4% of gross receipts initial rate and 6% of gross receipts maximum rate.

The supervisors’ cannabis tax ordinance proposal still requires a public hearing slated for July 10 when supervisors are expected to take official action on the tax ordinance proposal as well as the cannabis health ordinance.  The cannabis health ordinance will not appear on the November ballot.

During the supervisor’s proceedings on Tuesday, citizens and supervisors alike were concerned the amount of money the county would raise from a cannabis tax might fall short of the mark in adequately enforcing the law, especially the health ordinance.

Since enactment of Proposition 64 beginning this year, the state has collected only $34 million in tax revenue of the anticipated $175 million.  The state is considering shelving a plan to cut the excise tax from 15 percent to 11 percent even though cannabis sales are not as brisk as anticipated.

Board chair Karen Mitchoff of Pleasant Hill said the board should model the tax ordinance measure so that it requires a two-thirds majority voter approval, have an oversight committee and be reviewed yearly for adjustments based on the consumer price index.

“We’re going to impose this tax to cover our costs,” said District 2 Supervisor Candace Andersen of Danville, who represents a district where a number of citizens have aired widespread opposition to Proposition 64’s implementation.

Shawn Casey of First 5, a pro children’s organization, proposed that the county create with cannabis revenues a fund to aid children harmed by the effects of cannabis.

“I’m in favor of reasonable regulation,” said Vickie Norris of Friends of Proposition 64.  “I’m in favor of a tax.”  Norris noted Contra Costa’s tax proposal that HdL prepared won’t price out businesses like what occurred in Berkeley which had to scale back its retail sales tax which was 35%.

“The legal market is taking a piece out of the black market,” said HdL’s Mark Lovelace.  “Thirty percent of the marijuana remains in the black market.”

Supervisors OK 2018-2019 Budget Proposal

In speedy action, supervisors voted 5-0 in approving a $3.5 billion 2018-2019 recommended budget without public fanfare.  Supervisors will officially adopt the budget in September.  The spending plan is an increase from $3.1 billion for the current 2017-2018 fiscal year.

482,055 Square Foot North Richmond Warehouse Approved

Without hearing any opposition, supervisors unanimously approved a 482,055 square foot warehouse-distribution project that could create up to 800 jobs in the North Richmond.  Construction of the proposed Panattoni Warehouse project at 500 Pittsburg Ave. could get underway in the first quarter of 2019.

District 1 Supervisor John Gioia, who represents the North Richmond development site owned by Redus EL LLC, said the Panattoni Warehouse project is the first of at least two other similar warehouse distribution projects that are in the pipeline that will come before the supervisors in the near future.

Gioia refused to provide details about the other two warehouse-distribution projects.

“This is just not a warehouse,” the supervisor said.  Upon commenting how the North Richmond area is in a stage of transition from residential to warehouse, the supervisor said, “North Richmond has become ground zero for the fulltime warehouse area that is patterned after AMAZON, the type of company the gets products out sooner.”

In approving the project at Pittsburg Avenue and Richmond Parkway, supervisors approved a number of “traffic calming measures” in order to minimize the environmental impacts from more than 100 truck trips during peak period AM and PM periods.  Those traffic calming measures include “chokers and bulbouts.”

The developer will install solar power and plant 200 trees to replace 21 old trees that need to removed from the project site.  A 1.3-acre area site has been designated for a gas station with a mini-mart that will be constructed sometime after the warehouse-distribution building is constructed.