San Jacinto’s four legal cannabis dispensaries won their first step on possibly having the San Jacinto City Council, following a contentious Tuesday, Oct. 1 meeting, reduce their city taxes.
The dispensaries have provided the City of San Jacinto nearly 5% of their annual General Fund revenue in the past four years with nearly $3 million expected this year. The dispensaries for the past six months or more have shown that since California raised their annual excise rate to 15% just recently, to continue in paying the city’s 15% on top of that plus their other labor, power expenses, security and more is making it almost impossible to stay open resulting in laying off employees and continue paying the 15 cents on every dollar in retail sales.
Most of the residents, dispensary owners, their employees and others during public on and off the agenda comments asked the council to consider decreasing the city’s 15% tax down to 7% or lower so they could stay in business in the city. Others criticized the council members for their behavior toward each other and possible domestic crimes. In the three-minute public comments sessions, the council members are not normally allowed to answer questions or respond to the public.
As both the public comment time on the night’s agenda items and other off the agenda items lasted for almost two hours, three Riverside Sheriff’s Deputies carefully watched the proceedings. At least one officer is always assigned to city council meetings offering safety to the council, staff and attendees.
One speaker, Michael, on non-agenda items criticized the council for often “bashing each other” on the dais (in early September) when they should be considering the issues in the community instead. “It’s horrendous,” and “get your ____ together.”… You should quit,” he added.
Speaker Eddie George, a local video journalist, alleged Council Member Brian Hawkins should not be on the council since he is facing previous criminal charges and is awaiting a court date and trial on those matters. He held documents showing that case. He said he had been arrested in 2023 on alleged felony child abuse charges and is going to trial on the matter December 3. Hawkins indicated those charges have been dropped. George said, “He should step down until the court trial is over.”
Several city council candidates introduced themselves to the council and another sought help for her efforts in helping her to house those who are homeless on the streets. (Living Hope)
The discussion and direction to staff on the cannabis tax rates was placed at item 4.2 on the agenda that evening. leaving the council to decide on keeping the tax rate of 15% as it is or to take action to reduce it for the four cannabis dispensaries in town.
Erica Gomez, San Jacinto Finance Director, led the discussion with information about how the citizens, about 68%, voted to allow the cultivation of marijuana in the city in 2016. Later they agreed to allow dispensaries for both medical and recreational cannabis sales in the city with a 15% tax rate on each dollar that includes a pro forma clause for three years which was set in June 2019.
She showed how much revenue that had come to the city from that 15% tax which increased to nearly $3 million this fiscal year, or an average of about $420,000 per fiscal year. Then she offered how much would be lost if the 15% tax would be reduced from 10% down to about 7%.
Mayor Phil Ayala acknowledged that since then, “Times have changed, costs have changed due to inflation.” He said because of the change the cannabis businesses are suffering.
The city attorney said the rate could be reduced if the dispensaries showed they can no longer operate as a profitable business at this time since the pro forma agreement initially made by the cannabis dispensary owners has expired.
With that information, the discussion continued with more than a dozen dispensary owners, employees, customers and other interested parties looking to have the tax reduced. Four written comments were read with three residents in opposition and one in favor of reducing the tax rate.
Fatima Rahman, a dispensary owner, presented the council with documents showing how the city’s tax rate was the highest in the state and county and what rates the other cities in the county had, which are much lower than San Jacinto’s. Those cities, which have reduced their rates, have prospered even more in their general fund revenues, Rahman explained.
Rahman said, in addition to lowering their tax rates, some cities put a cap on how many new dispensaries could locate in their city, which she said should also be considered at a later date. She said the decision the city makes that night whether to change the current tax rate or reduce it may cost the city its current dispensaries and result in “having the city get zero revenue or reduce it to the recommended 7%”… to still have some. She said if it is not changed, nearly 275 people employed at the dispensaries, most who live in the city, could be without jobs, also hurting the economy.
Supporting her argument she provided a petition signed by 217 people in just hours who also supported lowering the city’s dispensary tax and set a cap on the number of new dispensaries settling in the city. “We just want to pay our employees; it’s really not a big deal,” she said.
Noting California State Law, (SB1059), Rahman said it was, which was recently signed by Governor Brown, would prevent cities from taxing gross cannabis receipts (over the counter) before the firm’s expenses. The state also receives 15% of cannabis dispensary sales statewide. It was the first time the council heard of the new bill and needed to review it.
Following the long public comment session the council made its decision to direct staff to prepare a resolution to amend the cannabis tax rates to be presented before the end of 2024 when a new city council is sworn in.
In making the decision Mayor Ayala, Mayor Pro Tem Valerie Vandever, Councilmember Hawkins and Councilmember Crystal Ruiz voted in favor of the motion with Councilmember Alonso Ledezma voting against it. Ruiz, before casting her vote, said she was 50-50 on keeping the rate the same but decided to see what the staff proposes in their recommendations and learn more about the issue. Hawkins similarly said more should be researched about the effect on the city budget of dropping the rate and would hear the staff recommendations before making a final decision. Ledezma said he voted against the measure in what he thought was the sentiment of the entire community from past discussions with residents who generally opposed any cannabis dispensaries.
In other business, the council approved the plans to construct a $560,000 prefabricated Americans with Disabilities (ADA) compliant and sewered restroom at Mistletoe Park by Cora Construction Inc., the lowest bidder on the project. There was some discussion about the cost of the restroom by members of the council and several in public comments, but it received the approval of the Improvement Project and will be financed from American Rescue Plans and other grants at little cost to the city.
The council also adopted a number of required development code amendments, mostly minor, as presented by the City Planning Commission.
The council plans to come back with more discussion about how the city mayor is being appointed at the next regular meeting to determine if it should be changed.
Tony Ault can be reached at tault@reedermedia.com.
The Valley News is made up of local residents dedicated to keeping our communities up-to-date with local issues. Since 2001, we’ve covered Temecula, Murrieta, Lake Elsinore, Wildomar, Winchester, Menifee, Hemet, and San Jacinto.
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