Moreno Valley officials are exploring the idea of asking voters to approve a commercial marijuana tax in November and setting rates lower than those in place — or proposed — in nearby cities.
“The rates we are proposing will make us very competitive in the marketplace,” Marshall Eyerman, chief financial officer and city treasurer, said at a recent Moreno Valley City Council study session on the topic.
The council is expected to consider a formal tax proposal in July and decide then whether to place it on the ballot. The general-purpose tax would require a simple majority vote for approval, Eyerman said.
Marijuana tax measures are cropping up across California in the wake of the November 2016 statewide vote approving Proposition 64, which set the stage for this year’s debut of legal recreational marijuana use.
Related: California cities chase marijuana tax revenue with wide-ranging rates and schemes
A survey of California’s 482 cities and 58 counties found that about 80 agencies had adopted some type of cannabis tax, Eyerman said.
Moreno Valley’s plan is still being created. Eyerman said the thinking is to seek voter authorization to tax gross sales of most types of cannabis businesses up to 8 percent and to assess cultivation enterprises at a maximum of $15 per square foot.
By design, that would put Moreno Valley below Perris, which earlier approved a ballot measure for the November election, and San Jacinto, whose voters authorized a tax in November 2016.
Perris is seeking to tax marijuana businesses up to 10 percent and cannabis growing operations up to $25 per square foot, Eyerman said. San Jacinto’s approved tax ceilings are 15 percent and $50 per square foot, respectively.
Statewide, Eyerman said, tax rates range from as low as 2.5 percent to as high as 20 percent on cannabis sales, and from $3 a square foot to $50 a square foot for cultivation enterprises.
There was a consensus among four Moreno Valley City Council members who attended the April 10 workshop to move forward.
City Manager Tom DeSantis said the ballot measure would list only the maximum rates that could be assessed, and it would be up to the council to actually set the rates.
Mayor Yxstian A. Gutierrez said he would prefer to set the assessment on cannabis sales significantly lower than the proposed ceiling of 8 percent.
“If we start at 5 percent, it’s way lower than a lot of cities,” Gutierrez said.
City officials are recommending the cultivation assessment be set at $7 per square foot to begin with, Eyerman said.
At the suggested rates, Eyerman said the taxes would raise $3.2 million in fiscal year 2019-20, which starts in July 2019, if the city were to issue all 27 potential marijuana permits authorizedrecently. That would be the first full budget year with the tax, which likely would take effect in early 2019.
In March, the council decided to open the door to a maximum of eight dispensaries or stores, eight cultivation facilities, five manufacturing plants, two testing facilities, two distribution centers and two cannabis microbusinesses — 27 in all. The city defines a microbusiness as a small, one-stop shop featuring at least three of four types of cannabis operations: cultivation, manufacturing, dispensary and distribution.
Eyerman said the period for submitting applications to open a cannabis enterprise opened April 2 and applications are beginning to come in.
So far, no permits have been issued, city spokeswoman Kimberly Sutherland said. None will be until the application period closes May 11, she said.
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