OAKLAND — California local governments scrambling to find tax revenues during the coronavirus pandemic are turning toward an industry they had considered taboo until now: cannabis.
It has been almost four years since voters legalized recreational marijuana in California, and nearly 70 percent of cities and counties have yet to embrace pot businesses because they see regulatory problems or have concerns about public safety and negative publicity.
But some, facing insurmountable budget gaps as unemployment rises to its worst level since the Great Depression, would now rather open their doors to cannabis than lay off more workers or cut services. So far, a handful of cities have begun developing cannabis tax measures for the November ballot since voter approval is required to add local taxes. It’s a trend many in the industry expect to continue over the next month absent approval of a federal bailout for state and local governments.
“I think at the end of the day you’ll still have those ‘not in my backyard’ arguments,” said Tiffany Devitt, chief information officer for CannaCraft, a large-scale cannabis manufacturer. “But, if a person can’t find a job, or their kids can’t find work, or their jurisdiction can’t raise enough funds to cover basic social services, then people adjust.”
San Bruno, a Bay Area city that two years ago banned marijuana businesses, is among the governments with a change of heart. Last week, city council members voted unanimously to fund a tax measure and public education campaign, while voicing support for the idea of exploring an ordinance that would allow a dispensary or delivery service to open sometime next year.
According to projections from city officials, an operational cannabis shop could reduce San Bruno’s projected $8.2 million deficit in the upcoming fiscal year by around $300,000.
“It’s not gonna solve our problems, but it’s going to keep $300,000 that we desperately need to hire whomever it is to make our city better,” Councilmember Marty Medina said at the meeting.
The city of Montclair in San Bernardino County is facing a similar budget crunch as sales tax revenue has cratered following the temporary closure of its mall. There, city officials are considering proposals to repeal a marijuana ban and create regulations for commercial activity. The plan could raise up to $2 million annually, according to City Manager Edward Starr.
While both San Bruno and Montclair are left-leaning cities where a majority of residents voted to approve the Prop. 64 legalization initiative in 2016, Republican-led jurisdictions where voters rejected the statewide measure are also starting to consider cannabis — to the surprise of industry observers.
Published: June 28, 2020
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