Chula Vista poised to place marijuana tax on November ballot

Chula Vista’s City Council is expected to vote Tuesday to place a marijuana tax measure on the November ballot.

If approved by voters in November, the city could generate $6 million a year in tax revenues. If voters reject the measure, Chula Vista won’t have a cannabis industry.

The council approved a set of regulations by a 4-1 vote in February. Those regulations are dependent on voters approving a marijuana tax in November.

The measure calls for a range of 5 percent to 15 percent of gross receipts of marijuana businesses, except cultivation, and a fee of $10 to $25 per square foot of space for cultivation.

The measure also allows the City Council to adjust the tax rate within that range without voter approval.

In 2016, San Diego approved a 5 percent recreational cannabis tax, with an increase to 8 percent after one year.

In Oakland, where the recreational tax rate is 10 percent, the city council voted unanimously to place a lower tax rate on November’s ballot. This was done partly to stay competitive with neighboring cities, some of which have a 3 percent tax, according to news reports.

Chula Vista has had difficulty shutting down illegal dispensaries all year. Part of the rationale behind having a legal marketplace is that it would help the city close more illegal shops.

“The City of Chula Vista has experienced the negative impacts and secondary effects associated with the operation of unlawful cannabis businesses within its corporate boundaries,” a staff report reads. “After considerable public debate and evaluation of the pros and cons of allowing commercial cannabis business activity in the City, the Council directed staff to prepare an ordinance which would regulate, permit and license commercial cannabis activity in the City.”

Chula Vista’s marijuana regulations allow wider use than San Diego’s.

While San Diego limits cannabis businesses to storefront recreational dispensaries, Chula Vista is open to retail, delivery, manufacturing, cultivation, and testing facilities.

There are limits.

The city will only approve up to 12 marijuana retailers – either storefronts or delivery – in Chula Vista. There can only be three retailers in one of Chula Vista’s four city council districts and no more than two storefronts in each district.

Additionally, the city can only approve 10 cultivation businesses.

There is no limit on testing and manufacturing facilities, which produce edibles and oils from cannabis extract.

November’s tax measure requires a simple majority – 50 percent, plus one – for approval.

The tax revenues generated from the measure will go into the city’s general fund and can be spent at the discretion of the city council on a variety of projects.

In January, the city payed a research firm to conduct a public opinion survey to identify voter support of a potential measure.

The survey showed that 66 percent of voters supported a tax on marijuana businesses.

The cost of putting the tax measure on the November ballot is about $70,000. That cost was included in the 2019 fiscal year budget.