Tulare voters will choose whether or not to implement a cannabis tax that would benefit the constituents through infrastructure, increase public safety and fund the emergency homeless shelter
TULARE – The city of Tulare was one of the few towns to previously host a medicinal cannabis dispensary, but now that commercial marijuana is legal the city is forced to appeal to voters to allow for a standardized cannabis tax.
A yes vote on this November’s ballot 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. Tulare administrators have said the proceeds from the tax will go to things such as the emergency homeless shelter, public safety and city infrastructure.
Tulare city manager Marc Mondell said that because dispensaries are already approved to locate in town, the only thing voters have to decide is whether the city will benefit by levying an additional tax.
“The city did not have to allow three dispensaries to offer retail cannabis but did so in-part to ensure there would be additional revenue to address community needs,” Tulare city manager Marc Mondell said.
Tulare has gone through the cannabis tax process a bit backwards in comparison to other nearby cities. Other cities, like Exeter, will put a measure on the ballot to determine what voters want before they allow dispensaries to enter city limits. According to Tulare’s city attorney Mario Zamora Tulare is different because unlike surrounding areas, they already had medicinal cannabis stores in place.
The pre-existing medicinal cannabis stores were the forerunners to bring recreational cannabis to Tulare. Zamora said they wanted to switch to a fully recreational business because that was the way the industry was heading. Tulare city council voted to allow recreational cannabis with the stipulation that the revenue would be used for the “greater good,” according to Mondell.
“So many people saw cannabis and the allowing of the dispensaries as a moral ill, but I think everyone feels like taking that revenue and using it for the operation of a homeless shelter is a moral good,” Mondell said.
Development money
If the tax is voted down it would not be as if the city has nothing to gain from dispensaries. The city created development agreements – contracts between the developers and the city – with each cannabis dispensary that was 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.
While creating an agreement with Herb ‘N Vibes in 2021 Tulare created separate agreements with Valley Pure and Token Farms, also before bringing a tax measure to the voters.
“[Creating development agreements] wasn’t the traditional way to do it, but this was the best way to do that to make sure that [Herb ‘N Vibes] could continue to compete,” Zamora said. “That way we could still move forward and they wouldn’t be waiting [for the November election].”
Tulare’s benefit
November’s ballot measure will set a consumption tax to cannabis products sold in dispensaries. The proceeds from the tax will go to the city to fund issues such as public safety, infrastructure and the proposed homeless shelter.
The emergency homeless shelter is still in the works for the city, but relies heavily on funding from a cannabis tax. “If we’re going to move forward with this homeless shelter, there is no other source of funds earmarked and dedicated for its operation,” Mondell said.
This tax measure will require each of the businesses to pay a universal cannabis tax leveling the playing field between the three businesses. A yes vote will allow the city to tax cannabis products up to 10% of their gross receipts, allowing it to be adjusted for inflation. Mondell said the current goal is to tax the dispensaries at 5%.
“The current approach is intended to be 5% and it will be reviewed annually,” Mondell said. “It’s not intended to be a money grab by the city, per se, what it’s intended to do is try to address issues that are occurring in the communities.”
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 said 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.
“To make it even that we think 5% is the right number to be quite frank, because of how much it’s going to cost us to run the homeless shelter and other things,” Mondell said. “We have to deal with police and fire with all this other stuff that comes with cannabis.”
Aside from the measure making the tax equitable between the three, a yes vote will also allow the city to have control of the tax percentage. Each year the city will review the tax measure and hear from the public before making any future decisions.
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.
If this ballot measure is not passed, the development agreements will remain in place until further discussion. The city will still receive 5% of gross revenue each year from both Valley Pure and Token Farms as well as the 2% from Herb ‘N Vibes.
Herb ‘N Vibes did not respond for comment by press time.
