Encinitas City Council sends cannabis business tax proposal to voters

Encinitas voters will decide whether to add a city-wide cannabis trade tax this November, after the City Council voted unanimously to approve an election measure on May 11th.

If approved, the city could tax retail cannabis companies between 4% and 7% percent, as well as between 1% and 4% for non-commercial uses. The crop would be taxed at between $ 2 and $ 10 per square meter of deck area. The City Council should adopt an ordinance that sets the specific tax rate within these ranges, and would have the flexibility to change the tax rate as long as it remains within the specified ranges.

From that tax range, the city estimates revenue of $ 800,000 to $ 1.4 million once the four cannabis retail businesses allowed by municipal law are up and running. A lottery process that attracted more than 200 applicants who want these licenses is still underway.

If approved, the new tax would take effect on January 1, 2023.

New cannabis businesses and potential taxes follow the approval of Measure H, an election measure passed by Encinitas voters in 2020 to allow a limited number of cannabis businesses in the city. A similar election measure failed in Solana Beach during the same election.

In 2016, nearly two-thirds of Encinitas voters passed Proposition 64, which legalized recreational cannabis sales, but also allowed cities to ban cannabis companies within their own borders if they wanted to. Measure H overturned a ban on cannabis in Encinitas that the council had enacted a few years earlier.

Encinitas resident Trina Priest said during a public comment that the proceeds should support local students.

“It would be my recommendation that the tax measure be put to the November vote and then direct these taxes towards the education of young people,” he said. “Today’s K-12 students have suffered a series of unexpected stressors during the COVID-19 pandemic.”

Another Encinitas resident, Mark Wilcox, mentioned some of the litigation in which other cities are involved in cannabis-related issues.

“Perhaps more precautions need to be taken to protect the citizens of Encinitas, especially our young people,” he said.

The resolution to present the tax proposal to voters required at least a four-fifths vote. Council members also discussed the official argument in favor of the measure of the vote that will be distributed to voters at the end of the year.

“I think they’ve taken into account a lot of different events that could happen in the future,” said Deputy Mayor Joe Mosca, referring to municipal consultancy HdL Companies, which has been working on the tax structure, “because this tax will be applied in the event of changes in regulations or other things in the future ”.