Can Weed Save Ives Park

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Can weed save Ives Park?
By Laura Hagar Rush, Sonoma West Editor, [email protected]
Sep 25, 2019

Carnacchi’s cannabis tax proposal renews interest in renovating Ives Park

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At the last Sebastopol City Council meeting on Sept. 17, Councilmember Michael Carnacchi introduced a discussion item about putting a cannabis business tax on the March 2020 ballot, with the goal of raising money to renovate Ives Park.

Carnacchi noted that other local cities, like Cloverdale, Cotati and Santa Rosa, had levied taxes on their cannabis businesses as a way of raising revenue for city projects.

He proposed a 2% special tax on cannabis businesses, which, according to the city staff report, would raise around $100,000.

“Ives Park desperately needs work,” Carnacchi said. “It’s in pretty bad shape. The Ives Park Master Plan was developed in 2013, and we’ve accomplished very little toward getting that done,” noting that the city’s current park budget is around $16,500, but that the Master Plan for Ives Park calls for spending $3.7 million.

In discussing his ideas for the cannabis tax, Carnacchi said that the tax should have a sunset clause — meaning it would end when its goal was accomplished — and that it be repeal-able if it proved too onerous for the businesses in question (though who would determine this wasn’t clarified). He suggested that if customers knew that a portion of their money was going toward the renovation of Ives Park, they might be lured out of the less expensive black market and into local dispensaries. Carnacchi also suggested the idea of a cannabis event in Ives Park, the proceeds of which would go to fund the renovations.

He also suggested that the city could take turns taxing different types of businesses, maybe switching off every two years — first cannabis, then wineries and tasting rooms, then restaurants.

Cannabis fights back

Since the idea of taxing wineries and restaurants wasn’t on the agenda, the only industry that turned out in force that night to object to this plan was the cannabis industry.

“As you know, we are taxed heavily at every step of the supply chain,” said Ashley Nelson of the cannabis manufacturing company The Resourcery. “If we add a tax now, future operators will be discouraged from coming to the city, and existing operators will have a harder time growing and expanding. Right now Sebastopol is a really attractive place to have a cannabis business … Please do not impose further taxes on an already heavily taxed industry.”

Continues here

This is...simply put... a horrendously bad idea. As I've said before- I knew there was no hope real hope for the cannabis industry- in particular the many boutique growers who should have been encouraged to thrive (and bring in revenue)...when Supervisor Rabbit in one breath said "The cannabis industry doesn't deserve any special treatment. They should be treated like any other business." ,,, while in the next breath turning around and voting to restrict/tax/and regulate the industry unlike any other business.

Feel free to correct me if I'm wrong - but there are only 2 cannabis businesses in Sebastopol city limits- the 2 dispensaries.

Let me tell you a story. A number of years ago when things were loosening up...and one could finally, somewhat openly, deal with the state... we went that route. We were a small, boutique, off-grid (about 3K watts of solar) "organic" farm producing about a 100#'s a year. We had, at our peak I believe - 350 or so collective members. And so, we had to have a "delivery service" for our members.

When we filed taxes with the IRS- we had to file under something called 280E - as both the dispensaries in town do. 280E is one of the multitude of tax rates the IRS has for things that are "illegal" (under federal law). The nominal tax rate under 280E is between 70-90%. You can not deduct ANY costs of business like anyone else can. We- like the dispensaries, had to hire accountants and tax lawyers you had mostly spent decades on the other side- working for the IRS against "illegal" cannabis. And while they knew the loopholes- at least the ones the IRS was not likely to press, they could only save you so much (far less when factor in their very high costs).

I would guess most legal dispensaries - whether small and playing it safe (or huge and trying to win big but paying a fortune in litigation), are still paying at least 2-3X the federal taxes of your average business.

Then we have. the state and local taxes. California charges a 15% sales tax on cannabis sales- almost twice the normal tax.

And just under $150 a pound tax on flowers taxed to the cultivator. (for consideration- last year wholesale prices averaged around $1000, maybe $1200 for exceptional quality. Labor for harvest and trimming can run upwards of $300 a pound- *not* including all the EDD paperwork. I think we all know land costs here. Permitting...which in theory you can write off the costs over many years (though usually requires renewal every 1-2 years) can run $10K to well over $100k. And now growers have to put everything through a distributor - who have their own costs and profit margins. Everything has to be branded and packaged in secure packaging with all the correct verbage and warnings.

Beyond that- the industry has costs few if any others do. Security camera requirements. Fencing - including visual screening. The fact that basically every permit application is challenged resulting in month if not a year+ delays and associated costs. General compliance where *EVERYTHING* you do is under scrutiny from multiple agencies so every I must be dotted and every T crossed .

*THE CANNABIS INDUSTRY CAN NOT AFFORD ANOTHER TAX AT THIS POINT*

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Posted in reply to the post by SonomaPatientsCoop:

This is...simply put... a horrendously bad idea. As I've said before- I knew there was no hope real hope for the cannabis industry- in particular the many boutique growers who should have been encouraged to thrive (and bring in revenue)...when Supervisor Rabbit in one breath said "The cannabis industry doesn't deserve any special treatment. They should be treated like any other business." ,,, while in the next breath turning around and voting to restrict/tax/and regulate the industry unlike any other business.

Feel free to correct me if I'm wrong - but there are only 2 cannabis businesses in Sebastopol city limits- the 2 dispensaries. ...

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I might agree with you, if it were not for another special treatment the Sebastopol cannabis business gets: it is a City sponsored duopoly, that is Sebastopol only allows 2 cannabis dispensaries in the city limits, thus limiting the competition. Plus, I don't think a 2% tax would shift demand much, if at all, and "Cloverdale, Cotati and Santa Rosa, had levied taxes on their cannabis businesses as a way of raising revenue for city projects."

OTOH, a "cannabis event in Ives Park" sounds like a fine idea! But wait... wasn't that what the Peacetown concerts were? :wink:

For a long time - Seb only had one Dispensary - PIM...and I never saw them all that busy - even when prices could be much lower. And the few times I ever went there (back when they still had clones and seeds) were older than me... and mostly seemed to be truly trying to deal with medical conditions (and yes... in some cases, enjoying the side effects of the medicine).

I don't know... but I doubt Sebastopol can maintain 2 dispensaries long term. Unfortunately the fees and taxes have raised retail prices considerably - and from what I see it has mostly impacted elderly patients who are honestly trying to deal with health issues. Many others... well..it is SoCo and finding top quality ....or even just decent cannabis for a fraction of the price...

Come on Barry... do you *really* think it's fair to further tax the most taxed and regulated (and hit by fees) industry CA has ever seen? Who is going to be hurt by this? I'd argue.. elderly patients and the few small boutique/organic growers who have managed to survive.

Why not a 2% tax on the wine industry? (Oh yeah- I forgot- they have political muscle and *NO* one on the council wants to loose *their* backing...

Or how about this... before taxing the cannabis industry anymore we let them into the programs to get credits for carbon sequestration ? (Or give them access to banks...and bank loans- another major stumbling block). Or end the idiocy of denying *any* permits in RRD lands- where we pushed them to for the past 20 years? Forcing them to "ag land" - when we know %#(^ well there's no decent ag land that the wine industry hasn't bought.

This is why I left SoCo to consult to the parts of the industry in counties that understood they needed to support an industry that- even w/o taxes, had put millions into their economy. And why... in a couple months... I think I'm leaving CA for good...

The 15% excise tax is on top of sales tax. "Effective January 1, 2018, a 15 percent excise tax is imposed upon retail purchasers of all cannabis and cannabis products, including medicinal cannabis and distributors are required to calculate and collect the amount of excise tax due on the cannabis or cannabis products they supply to you. The 15 percent excise tax is calculated based on the average market price from the retail sale. Please refer to the heading, Average Market Price, below for more information. As a retailer, you are required to pay the cannabis excise tax to your distributor and collect the cannabis excise tax from your customers. No cannabis and/or cannabis products may be sold unless the cannabis excise tax is paid by the purchasers (consumers) at the time of sale." https://www.cdtfa.ca.gov/industry/ca....htm#Retailers

Then there are the taxes on down the line. https://sonomacounty.ca.gov/Cannabis/Taxes/All-Cannabis-Tax-Rates/

Then there could be a local city sales tax. And then there's the state sales tax on top of that (what is that, 7 or 8%?), which people can bypass if they pay for the state medical card - MMIC - after paying to get a recommendation from a doctor).

I wish people had read prop 64 before they voted. My understanding is that we've lost a lot of great growers. And I worry about the folks who needed the care packages that the dispensaries gave them -- back when they were allowed to :(

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Posted in reply to the post by SonomaPatientsCoop:

This is...simply put... a horrendously bad idea. ...

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The problem is not how to pay for it, it's the plan for the park itself. Seebasstoepull has resisted citizen input for decades concerning culverting Calder creek. This creek is the reason for this town being here since native times. We desecrate the earth in our willful ignorance of what is under our feet. Leave the park alone, why spend money to damage the land further? Have a citizen party to pull out the stupid shit that's there now and pay nothing.