Tulare measures ‘Y’ they should vote for cannabis tax

Cannabis tax titled Measure Y is set to appear on the November ballot in Tulare; city staff, Tulare Chamber held an election education forum to explain what a yes or no vote means

TULARE – Usually with elections comes confusing language on the ballot, so with efforts to help the community understand and encourage people to vote, city staff and the Tulare Chamber hosted an election forum explaining Measure Y, and what it would do for the city.

On Monday, Sept. 26, city manager Marc Mondell and chief financial officer Diego Ibanez spoke to the community on local election information. Topics included the newly redrawn city council seats, Measure Y and the emergency homeless shelter. The city will hold another educational forum on Oct. 13 at the city council chambers. 

“A big part of the sessions are to encourage people to vote,” Mondell said. “It’s everyone’s civic duty and an opportunity. We love the opportunity to get out and talk to people… just being able to participate in our governmental processes is a good thing for our citizens to exercise.”

Measure Y is what is known as the cannabis business tax ordinance. A yes vote on Measure Y will level the playing field between the already established medical turned commercial dispensary, Herb ‘N Vibes, and their incoming competitors, Valley Pure and Token Farms. The latter two are setting up shop near the outlet mall. The measure places the decision in the city council’s hands as to what percentage the cannabis retail businesses will be taxed. Revenue from this tax measure will benefit community needs, such as law enforcement, parks and recreation, infrastructure and the emergency homeless shelter. 

According to the presentation from the educational forum, Measure Y is a proposed tax which levies annual rates on cultivation, gross receipts and other cannabis business. This tax is only a consumption tax and will only affect those who purchase cannabis products. It only applies to operations within the city limits and will not raise taxes on residents, their homes or their properties.

In order for the vote to pass, it needs 50% plus one of the votes cast. Voters will see this language on the ballot with a yes or no option:

“To fund general municipal expenses such as police, fire, address homelessness, roads, and recreation, shall the City tax cannabis businesses at annual rates not to exceed $10.00 per canopy square foot for cultivation (adjustable for inflation), 10% of gross receipts for retail cannabis businesses, and 10% for all other cannabis businesses will be levied until repealed b the voters of the City Council?”

According to Mondell, the city manager’s office is recommending the tax be set at 5%. Each year the city council will discuss the level at which the percentage is set and determine if it needs to be raised or lowered. City council also has the ability to repeal the measure in the future.

“[10%] is the cap, that’s the max,” Mondell said. “Every year the council will review and make a decision. So there’ll be a public meeting where the council will vote on what that tax rate will be for that year.”

Tulare has gone through the cannabis tax process a bit backwards in comparison to other nearby cities. Woodlake for example had not allowed cannabis in until they passed a tax several years ago. Tulare however, was one of the only cities to already have medicinal cannabis businesses operating. Those pre-existing medicinal cannabis stores were the forerunners to bring recreational cannabis to Tulare. City council voted to allow recreational cannabis with the stipulation that the revenue would be used for the “greater good,” according to Mondell.

Measure Y will bring long-term financial stability to the city according to the presentation. The funds brought in from this measure have greater flexibility than other tax measures already in place. The funding must also stay local, so it cannot be taken away by the state or federal government. Additional community needs that would benefit from this funding are police, fire, emergency responders, the parks and recreation department and infrastructure maintenance. 

“Properly maintaining our streets and roads improves quality of life and keeps our neighborhoods vibrant,” stated in the presentation . “Addressing issues in our infrastructure needs before such repairs become more expensive in the future helps promote fiscal responsibility.”

Funds from Measure Y will also be used for the city’s emergency homeless shelter. As it stands now, the city has earmarked $1.5 million of cannabis revenue toward the shelter; however, each year the city can determine the need and decide to use all $1.5 million or only a portion. This leaves the remainder of the funds to be spent else where.

Neither the city of Tulare nor the Tulare Chamber of Commerce advocates a YES or NO vote on Measure Y.

The city’s current plan

Because the city did not have a tax measure in place before allowing the cannabis industry into their city, they came up with an alternative plan. The city of Tulare created development agreements – contracts between the developers and the city – with each cannabis dispensary that were approved earlier this year.

The first development agreement was initiated by Herb ‘N Vibes in 2021. Their circumstances were different from Valley Pure and Token Farms because they were already established as a medical marijuana facility. They feared being at a competitive disadvantage against recreational dispensaries and wanted to become one themselves. Without a tax in place the city crafted a development agreement with Herb ‘N Vibes in order to collect taxes on the dispensary, until a tax could be approved by voters in November – assuming the tax is approved.

The immediate difference in this tax measure and the existing development agreements is that Herb ‘N Vibes would pay an additional 3%. The proposed tax measure is not in addition to, but in place of, each development agreement. Currently, in their agreements, Valley Pure and Token Farms have already agreed to pay the city 5% of their gross revenue each year. On the other hand, because Herb ‘N Vibes was grandfathered into the recreational cannabis business they will only pay 2% of their gross annual receipts to the city.

The city does not know what it will cost to run the entirety of the homeless shelter, they only have estimates. But Mondell has said in an earlier interview with the Sun-Gazette, the additional 3% from Herb ‘N Vibes could be extremely beneficial considering the shelter itself is estimated to cost $1.5 – $2 million annually. That cost does not include the other expenses like public safety and infrastructure.

In addition to the actual funding, this measure will also help the city plan for future development. Without this ballot measure, any cannabis business in the future will have to create a development agreement with the city, which is not an easy process.

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