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City of San Leandro Meeting Date: March 20, 2017 Staff Report Agenda Section:File Number:17-114 ACTION ITEMS Agenda Number: TO:City Council FROM:Chris Zapata City Manager BY:Jeff Kay Assistant City Manager FINANCE REVIEW:David Baum Finance Director TITLE:RESOLUTION Setting the Cannabis Business Gross Receipts Tax at a Rate of 7% until June 30, 2019, and Increasing to 8% on July 1, 2019, and Increasing to 9% on July 1, 2021. WHEREAS, on November 8, 2016, San Leandro voters authorized Measure NN (the Cannabis Business Tax), which established a new gross receipts on cannabis businesses of up to 10%; and WHEREAS, the results of this election were subsequently certified by the City Council on December 19, 2016; and WHEREAS, the City Council also previously issued three medical cannabis dispensary permits, consistent with the City’s adopted medical cannabis dispensary ordinance; and WHEREAS, the three permitted medical cannabis dispensaries are subject to the new tax created by Measure NN; and WHEREAS, in the interests of ensuring the success of these new businesses and in recognition of the fact that these businesses have significant up-front capital and tenant improvement costs as well as other significant state and federal taxes, the City Council desires to implement Measure NN with a lower rate of tax during the initial years of implementation, and then gradually increase the tax rate in subsequent years. NOW, THEREFORE, the City Council of the City of San Leandro does RESOLVE as follows: That said cannabis business tax is hereby set at a rate of 7% of gross receipts, which shall remain in effect until June 30, 2019. On July 1, 2019, the tax rate shall then increase to 8% of gross receipts, and then increase to 9% of gross receipts on July 1, 2021. Page 1 City of San Leandro Printed on 3/13/2017 175