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CITY OF SAN LEANDRO <br />A M•:GLTI►A <br />DATE: March 15, 2016 <br />TO: City Council Finance Committee <br />FROM: Chris Zapata, City Manager <br />BY: Eric Engelbart, Deputy City Manager <br />SUBJECT: Cannabis Tax Discussion <br />SUMMARY AND RECOMMENDATION <br />Staff recommends that the Finance Committee direct City staff to proceed forward with the <br />next steps necessary for the City Council to bring before San Leandro voters a cannabis -related <br />business tax on the November 8, 2016 ballot. <br />BACKGROUND <br />On September 8, 2015, the City Council awarded the City's first medical cannabis dispensary <br />permit to Harborside San Leandro. At the October 5, 2015 and November 2, 2015 regular City <br />Council meetings, several members of the Council expressed interest in modifying the adopted <br />ordinance to facilitate the approval of a second dispensary. Then on December 21, 2015, the <br />Council unanimously adopted a motion directing staff to bring forward amendments to the <br />adopted Medical Cannabis Dispensary Ordinance to permit the second dispensary. As part of <br />that action, the Council also directed the Rules Committee to develop a process for selecting <br />the business team who would be authorized to operate that second dispensary. On January 13, <br />2016, the Rules Committee considered the matter and its recommendations were then <br />discussed by the City Council and adopted at its February 16, 2016 meeting. <br />DISCUSSION <br />In light of the fact that the City of San Leandro does not presently have in place a gross receipts <br />tax on sales of cannabis (which is commonplace in other California jurisdictions that have <br />allowed dispensaries to operate), the City negotiated a financial commitment from Harborside <br />San Leandro to contribute 4% of its gross receipts to a community benefits fund, 80% of which <br />would be donated to local non-profit organizations. In addition, the dispensary will voluntarily <br />donate another 1% of gross receipts (estimated to generate $71,800 in 2017) and 10% of net <br />income (estimated to generate $45,000 in 2017) to the City of San Leandro. <br />