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City of San Leandro <br />Meeting Date: October 5, 2020 <br />Staff Report <br />Agenda Section:File Number:20-431 CONSENT CALENDAR <br />Agenda Number:8.D. <br />TO:City Council <br />FROM:Jeff Kay <br />City Manager <br />BY:Eric Engelbart <br />Deputy City Manager <br />FINANCE REVIEW:Susan Hsieh <br />Finance Director <br />TITLE:Staff Report for City of San Leandro City Council Resolution Authorizing a <br />Consulting Services Agreement with MuniServices/Avenu Insights & Analytics for <br />Annual Cannabis Business Audit Services and Associated Appropriation of <br />$102,000 from the General Fund Unrestricted Fund Balance to be Paid for by <br />Annual Operating Permit Fees <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends the City Council approve the proposed resolution authorizing the City Manager <br />to execute an agreement with MuniServices/Avenu Insights & Analytics for Cannabis Business <br />Audit Services and approval of an associated appropriation of $102,000 from the General Fund <br />Unrestricted Fund Balance to be Paid for by Annual Cannabis Dispensary Permit Fees. <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 the election results on December 19, <br />2016. The measure permits the City to impose a gross receipts tax on all businesses located <br />within the City that use the cannabis plant as part of their business model, at a maximum rate of <br />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 $35,000 dispensary operating permit fee that is imposed <br />to recover the City’s costs in regulating cannabis dispensary businesses. <br />Prior to bringing Measure NN before the voters, City officials and staff declared during various <br />public meetings and community events that the intention of the “up to 10%” language of the tax <br />measure was meant to provide flexibility in the rate at which the tax would be imposed. Factors <br />supporting such flexibility include: <br />Page 1 City of San Leandro Printed on 9/30/2020 <br />76