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File Number: 17-113 <br />imposed their own local voter-authorized gross receipts taxes. All three of San Leandro’s <br />permitted dispensary operators currently do business in such jurisdictions, including <br />Harborside’s San Jose facility, which is subject to a 10% gross receipts tax. Additionally, the <br />Davis Street Wellness Center voluntarily offered to contribute 9% of its gross receipts to the <br />City of San Leandro as part of its proposal for a medical cannabis dispensary permit. Blum <br />San Leandro’s facility in Oakland is currently subject to Oakland’s 5% gross receipts tax. The <br />City of Oakland is also in the process of developing and implementing a new Equity Permit <br />Program that would establish significant new requirements and restrictions on new cannabis <br />businesses that would not be applicable in San Leandro. <br />It is also important to note that all three of San Leandro’s medical cannabis dispensary permit <br />holders will be providing various programs designed to offer reduced cost and/or free <br />medicine for low-income, terminally ill, or otherwise disadvantaged patients. <br />Next steps <br />In addition to this recommended action, there are several other cannabis business-related <br />decisions that will be brought forward for City Council consideration in the coming months. <br />Per the Council’s direction at its December 19, 2016 meeting, staff will bring back for the <br />Council’s consideration various proposed San Leandro Zoning Code amendments that would <br />facilitate non-retail cannabis manufacturing and laboratory testing businesses to operate in <br />certain sections of the City’s industrial areas. If the Council were to authorize such cannabis <br />businesses to operate, they too would be subject to the local gross receipts tax. <br />Per the City Council’s direction at its February 21, 2017 meeting, staff will present a <br />discussion related to the recreational/ adult use of cannabis that was authorized by <br />Proposition 64. As part of that discussion, staff seek direction from the City Council regarding <br />whether the three permitted medical cannabis dispensaries should be allowed to sell cannabis <br />to the public without a doctor’s recommendation. Per Proposition 64, such sales could begin <br />as early as January, 2018, subject to state and local approval. Both of the above items are <br />tentatively scheduled for discussion at the May 1, 2017 City Council meeting. Lastly, two out <br />of the three previously permitted medical cannabis dispensaries still need to submit <br />conditional use permit applications to the Community Development Department for review and <br />consideration by the Board of Zoning Adjustments. <br />Fiscal Impacts <br />Because none of the three permitted dispensaries are operating yet, it is difficult to forecast <br />precisely how much revenue would be derived from the recommended 7% gross receipts tax. <br />However, using estimates provided by the permitted dispensaries’ various proposals, staff <br />estimates that the proposed tax could generate at least $500,000 annually for the City’s <br />General Fund during the first year of implementation. <br />Attachment(s) to Staff Report <br />·Resolution establishing the proposed medical cannabis tax rate <br />PREPARED BY: Eric Engelbart, Deputy City Manager, City Manager’s Office <br />Page 3 City of San Leandro Printed on 3/13/2017 <br />174