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