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A Multi-Million Dollar Industry?

  • by Abagael Giles
  • in Featured · News
  • — 11 Aug, 2017

Mammoth Planning and Economic Development Commission weighs options for taxing, permiting cannabis retail

On Wednesday, August 9, Mammoth’s Planning and Economic Development Commission (PEDC) held a public workshop regarding commercial marijuana in Mammoth Lakes. Assistant Planner Nolan Bobroff gave commissioners a presentation on the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAUCRSA), which was adopted by the State legislature in June.

The law spells out the State of California’s intention to tax cannabis sales using an excise tax of 15 percent and a cultivation tax per ounce of $9.25 for flowers and $2.75 for leaves. Most of the revenue generated by those taxes will be used to fund the State’s own administrative costs associated with cannabis, and Bobroff reported that most municipalities in California are choosing to impose no more than a 6 percent local tax on cannabis.

In June of 2010, voters in Mammoth Lakes approved Measure M, which allowed a maximum of two marijuana cooperatives within the Town limits. Additionally, the current municipal code allows medical marijuana cooperatives in the Downtown, Old Mammoth Road, and Industrial Zoning Districts, and requires that they be 1,000 feet away from public schools, parks, and libraries in commercial zones.

Bobroff reported that, at the Commission’s April 26 hearing regarding marijuana regulations, members of the public supported a local tax of up to 15 percent on retail sales of cannabis. Currently, there is no special tax on cannabis in Mammoth Lakes. Medicinal Cannabis sales were even deemed exempt from the Tourism Business Improvement Tax (TBID) on the basis that most medicinal cannabis users are locals and not tourists.

At Wednesday’s meeting, Bobroff told commissioners that imposing a tax on cannabis would require a ballot measure, and that the November 2018 general election was the earliest date that a tax could be put to the public for a vote.

In 2010, the public voted to allow at most two medical marijuana dispensaries in Mammoth Lakes, rejecting an option for four. On Wednesday, Bobroff recommended allowing four permits for cannabis sales in Mammoth Lakes, with at most two being for medical marijuana. Those permits would have to be renewed annually, with a fee that covered the cost of hiring a consultant to conduct an annual financial audit of each cannabis business.

Robert Calvert, owner of Mammoth Lakes Wellness, the longest standing medical cannabis cooperative in town, told Town staff it was his opinion, as well as that of other prospective cannabis business owners, that the town could support no more than two cannabis retail businesses. “Four is way too many in this town… if you issue permits for four retail stores, you will set the industry up for disaster,” said Calvert at Wednesday’s meeting.

Calvert urged commissioners to  “go slow,” by allowing existing medical cannabis cooperatives to apply for a special permit to sell cannabis for recreational purposes as a trial program. “I don’t have a line out my door… hours go by when no one comes in during the day… it’s a difficult business to run in this town.” Calvert also asked that the Commission consider imposing a tax on gross sales instead of on square footage of retail. “That way, if we have a slow month, we get taxed accordingly,” said Calvert.

Commissioner Paul Chang expressed concern that limiting the number of retail permits available to the two existing permits would allow Green Mammoth and Mammoth Lakes Wellness to have a monopoly on the cannabis industry in Mammoth Lakes. Calvert said, “If this were a multi-million-dollar industry in this community, I’d say absolutely, issue more permits.”

Chang pressed further, asking Calvert if he expected business to boom around recreational cannabis sales like it did in Colorado. Bobroff said that Mammoth Lakes Wellness and Green Mammoth’s tax forms indicate the businesses bring in roughly $1 million in annual revenue each.

Neither of the existing cannabis retailers have been audited by the Town. Currently, the Town does not have the resources to audit the businesses, even though the municipal code requires an annual audit.  Calvert said he looked forward to a time when the Town can perform the audits, so that any misconceptions regarding profits and sales can be cleared up. “We deal in cash. That’s not easy. It’s difficult to pay your taxes when no local bank will take your money.”

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Topics: CannabisGray Line MammothMAUCRSAPEDCPlanning and Economic Development CommissionPRop 64

— Abagael Giles

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