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<br />Given that no permitted cannabis dispensaries are yet operating in San Leandro, <br />there is uncertainty as to how much revenue will be derived from the tax. <br />However, based upon revenue estimates provided by permit recipients <br />(Harborside San Leandro, Blum and Davis Street Wellness) as part of its <br />application materials for their dispensary permits, staff estimates that this revenue <br />measure could potentially generate more than $500,000 per year based on the <br />initial rate of 6% of gross receipts. <br />On March 20, 2017, the City Council authorized a tax structure that increases <br />over a three year period to 8%. <br />Overview of Modifications to the Business License Tax - $803,000 <br />received through June 30, 2017 <br />The modifications to the business license tax have been designed to align the <br />City’s business license tax rates with City Council priorities to support small <br />businesses located in San Leandro, while also incentivizing the productive <br />use of the City’s industrial areas. <br /> <br />Small Business Discount: <br />As structured in the ordinance, the per-employee component of the business <br />license tax for small San Leandro businesses with three or fewer employees is <br />eliminated. Previously, these businesses paid a flat fee of $128.20, plus a per- <br />employee fee that varies by business type. The per-employee fee is waived for <br />small businesses. <br />This modification results in a tax reduction for approximately 1,800 small <br />businesses located in San Leandro and a decrease in business license tax <br />revenue of $156,000 annually. Warehouse Rate Change: <br />Additionally, the ordinance modifies the tax rate applied to warehouse and <br />distribution businesses. They were previously charged a flat fee of $128.20, plus <br />a per-employee fee. The ordinance charges them $100 per 1,000 square feet of <br />building space. The rationale for this change is to align the business license fee <br />with the impact of such businesses, much of which comes from the physical size <br />of their business rather than the number of employees. Warehouse and <br />distribution businesses cause heavy wear on local streets through truck and <br />delivery traffic, but generate relatively few jobs and limited business license <br />revenue or sales tax. By modifying the business license tax rate based on square <br />footage, the tax would better reflect such businesses’ impacts on City <br />infrastructure and services. The additional business license revenue to be <br />generated from this change in collection methodology is $450,000 annually. <br />130