Fees demanded by pharmacy owners drop from 15% to 7%
San Jacinto's four legal marijuana dispensaries won the first step toward potentially reducing city taxes from the San Jacinto City Council after a contentious meeting Tuesday, Oct. 1.
These pharmacies have provided nearly 5 percent of San Jacinto's annual general fund revenue over the past four years, and are expected to bring in nearly $3 million this year. Since the state of California recently raised its annual sales tax to 15%, profits have increased by continuing to pay the city that 15% plus other costs such as labor, utilities, security, etc. Pharmacies for more than a month have shown. It's nearly impossible to stay open, which means laying off employees and continuing to pay them 15 cents on every dollar of retail sales.
Most residents, pharmacy owners, their employees and others spoke during public comment on and off the agenda to reduce the 15% city tax to below 7% to allow them to continue operating in the city. He asked the city council to consider it. Some criticized the MPs' behavior towards each other and the possibility of domestic crimes. During the three-minute public comment session, lawmakers typically cannot answer or answer questions from the public.
Three Riverside sheriff's deputies closely monitored the proceedings as the public comment period on the evening's agenda items and other non-agenda items lasted nearly two hours. At least one officer is always assigned to City Council meetings to ensure the safety of the council, staff, and attendees.
One of the speakers, Michael, criticized the council for frequently “bashing each other” on stage (in early September) when they should be considering community issues on other matters. “This is terrible'' “Get this shit together''… You should resign,'' he added.
House Speaker Eddie George, a local video journalist, argues that City Councilman Brian Hawkins should not serve on the City Council because he has faced criminal charges in the past and is awaiting court dates and trials on these matters. did. He had documents showing the incident. Hawkins said he was arrested in 2023 on a felony charge of child abuse and is scheduled to go to trial in the case on Dec. 3. Mr Hawkins indicated those charges had been dropped. George said he should resign until the trial is over.
Several City Council candidates introduced themselves to the City Council, and another City Council candidate also asked for help with her efforts to house homeless people on the streets. (Living Hope)
Discussion and instructions to staff regarding cannabis tax rates were placed in item 4.2 on the evening's agenda. It will be up to the council to decide whether to keep the tax rate at 15% for the town's four cannabis dispensaries or take steps to lower the tax rate.
San Jacinto Finance Director Erica Gomez led the discussion by providing information about how in 2016, approximately 68% of residents voted to allow marijuana cultivation in the city. San Jacinto then agreed to allow dispensaries to sell medical and recreational marijuana. A tax rate of 15% per dollar will apply, with a three-year external clause established in June 2019.
She showed how much revenue came into the city from the 15% tax, which increased to nearly $3 million this fiscal year, or an average of about $420,000 a fiscal year. She then suggested how much would be lost if the 15% tax were lowered from 10% to about 7%.
Mayor Phil Ayala acknowledged that since then, “times have changed and costs have changed due to inflation.” He said cannabis businesses are suffering because of this change.
City attorneys say the fees could be lowered if the dispensary shows it can no longer operate as a profitable business at this time, as the initial preliminary agreement signed by marijuana dispensary owners has expired. said.
Armed with that information, more than a dozen pharmacy owners, employees, customers and other stakeholders continued to argue for tax relief. Four written comments were read out, with three residents voting against and one voting in favor of lowering the tax rate.
Fatima Rahman, a pharmacy owner, presented documents showing how the city's tax rate is the highest in the state and county, and how other cities in the county have tax rates that are much lower than San Jacinto. It was submitted to the city council. Those cities that have lowered interest rates are thriving even more with general fund revenue, Rahman explained.
Rahman said that in addition to lowering tax rates, some cities have capped the number of new pharmacies that can open in a city, which should also be considered at a later date. She said that if the city decides to change or lower the current tax rate that night, it will put a strain on the city's current pharmacies and “reduce the city's revenue to zero or reduce it to the recommended 7%. ” could result. . He said that if things continue as they are, about 275 people working at pharmacies, most of whom live in the city, will lose their jobs, which could also have a negative impact on the economy.
To support her cause, she filed a petition signed by 217 people in just a few hours, also supporting lowering the city's pharmacy tax and capping the number of new pharmacies settling in the city. did. “We just want to pay our employees. It's really no big deal,” she said.
Rahman cited a California law (SB1059), recently signed by Governor Brown, that prevents cities from taxing gross receipts (over-the-counter) of cannabis before company expenses. Ta. The state also receives 15% of cannabis dispensary sales statewide. This was the first time Congress had to hear and consider a new bill.
After a lengthy public comment session, the City Council decided to direct staff to prepare a resolution to amend the cannabis tax rate to be submitted by the end of 2024, when a new City Council takes office.
In making this decision, Mayor Ayala, Mayor Pro Tem Valerie Vandever, City Councilwoman Hawkins, and Councilwoman Crystal Lewis voted in favor of the motion, while Councilman Alonso Ledesma voted against. Before voting, Lewis said he was 50-50 on whether to keep rates unchanged, but decided to see what his staff proposed in their recommendations and learn more about the issue. Hawkins similarly said more research needs to be done on the impact of rate cuts on the city's budget and that he would listen to staff recommendations before making a final decision. Ledezma said he voted against the measure because he believed it was a community-wide sentiment based on past discussions with residents who were generally opposed to marijuana dispensaries.
In other business, the City Council announced that the project's lowest bidder, Cora Construction, will construct a $560,000 American with Disabilities (ADA) compliant prefabricated restroom with sewer system at Mistletoe Park. approved the plan. The cost of the restrooms was debated by City Council members and public commenters, but the improvement project was approved and will cost the city very little and will be covered by the American Rescue Plan and other grants.
The City Council also adopted a number of necessary development code amendments, most of them minor, presented by the City Planning Commission.
The City Council plans to further discuss the method of appointing the mayor at its next regular meeting and decide whether changes should be made.
Tony Ault can be reached at tault@reedermedia.com.
