10A Action 2015 0908 - Laserfiche WebLink

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File Number: 15-463 San Jose authorized to go up to 10% of gross receipts (currently 7%) In addition to these financial contributions, HSL will also collect a 10% sales tax on all products sold, approximately 1.5% of which will be remitted to the City of San Leandro by the State Board of Equalization, which includes the 0.5% Measure HH local sales tax measure. Conservative projections indicate San Leandro's share of those sales tax receipts would be in the order of approximately $71,800 in 2016 and approximately $107,000 in 2017. It is also worth noting that Harborside's Oakland facility currently serves as the second largest sales tax contributor in the City of Oakland (including the above -referenced 5% gross receipts tax). City of Oakland staff also confirmed that Harborside proactively and consciously pays in full its tax obligations, including on the underlying cultivation sites over which it has control. According to City of Oakland staff, the collection of this tax from cultivators is an ongoing challenge, and Harborside distinguishes itself favorably in this regard. Analysis of Harborside Oakland's Legal Issues, and Any Potential Effects on Harborside San Leandro Staff independently analyzed the legal issues related to the Federal government's civil forfeiture action against Harborside Oakland. Subsequent discussions with HSL's principals corroborate the analysis. In short, a civil forfeiture is a lawsuit brought in Federal or State court (depending on the crime being charged) by law enforcement against property, real or personal, suspected of being involved in crime. U.S. Attorney for the Northern District of California, Melinda Haag, filed a civil forfeiture lawsuit to seize Harborside's assets about three years ago (2012), as part of a campaign to crack down on large-scale commercial cannabis operations. A seizure of Harborside's assets, including termination of its lease, would effectively close Harborside Oakland. Currently, medical cannabis dispensary operations are legal under state and local law but remain prohibited under federal law. The City of Oakland filed its own lawsuit against the Department of Justice to attempt to block the civil forfeiture action. Oakland argued primarily that if Harborside suffers a civil forfeiture, public safety and health crises would occur because Oakland would lose hundreds of thousands of dollars, including monies currently used for city regulation and enforcement of medical cannabis dispensary and cultivation operations, and medical cannabis patients would not have access to medicine, thereby causing them to resort to the black market, with all of its attendant personal dangers and health risks (including lack of testing and quality assurance). Oakland's lawsuit was appealed to the Ninth Circuit, which issued its opinion on August 20, 2015. Although the Court found that closure of Harborside would cause actual economic damages to Oakland, the Court held that the city does not have legal standing in the civil forfeiture action, which is between the Department of Justice and Harborside's assets. Currently, Harborside Oakland is still vigorously defending the civil forfeiture action. Even though Ms. Haag is to be replaced as U.S. Attorney for the Northern District of California, it is unclear what her successor will do related to the civil forfeiture action. Since 2013, and as explained further below, civil forfeiture actions against medical cannabis dispensaries and patients has declined nationwide. Staff analyzed specifically what effect, if any, a successful civil forfeiture action against Harborside Oakland would have on Harborside San Leandro, and the likelihood that a civil forfeiture action would be brought against Harborside San Leandro. To the first question, the answer is that there likely would be no effect on HSL. It has been represented by the City of San Leandro Page 7 Printed on 9/212015