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City of San Leandro <br />Meeting Date: June 17, 2019 <br />Staff Report <br />Agenda Section:File Number:19-331 ACTION ITEMS <br />Agenda Number:10.A. <br />TO:City Council <br />FROM:Jeff Kay <br />City Manager <br />BY:City Council <br />FINANCE REVIEW:David Baum <br />Finance Director <br />TITLE:Staff Report for a City of San Leandro City Council Resolution Maintaining the <br />Current Cannabis Business Tax Rate at 6% of Gross Receipts Until June 30, <br />2020, and Increasing it to 7% of Gross Receipts on July 1, 2020 and 8% of <br />Gross Receipts on July 1, 2022 <br />SUMMARY AND RECOMMENDATIONS <br />Per the request of the City Council at the May 20, 2019 City Council meeting, City staff presents <br />the attached resolution that would postpone by one year the previously established cannabis tax <br />rate increase from 6% of gross receipts to 7% of gross receipts, which is currently set to take <br />effect on July 1, 2019. If the proposed resolution is adopted, it would codify the following updated <br />tax schedule, which would apply to any cannabis business, irrespective of whether it is associated <br />with medicinal or adult use cannabis business activity in San Leandro: <br />·6% of gross receipts through June 30, 2020 <br />·7% of gross receipts effective from July 1, 2020 through June 30, 2022 <br />·8% of gross receipts effective July 1, 2022 <br />BACKGROUND <br />In November 2016, Measure NN (the "Cannabis Business Tax") was approved by a majority of <br />San Leandro voters, enacting new cannabis business tax provisions as part of Chapter 2-21 of <br />the Municipal Code. The City Council subsequently certified these election results on December <br />19, 2016. The provisions of the measure allow the City to impose a tax on all businesses located <br />within the City that make use of any component or derivative of the cannabis plant, at a maximum <br />rate of 10% of annual gross receipts. Measure NN does not legalize or otherwise permit cannabis <br />businesses in San Leandro and the cannabis business tax is in addition to the cost of an annual <br />business license, as well as the annual $60,000 dispensary operating permit fee that is designed <br />to recover the City’s costs in regulating these businesses. <br />Page 1 City of San Leandro Printed on 6/12/2019 <br />246