Council to weigh Oakland-like tax on big pot growers

Richmond City Councilman Tom Butt, shown speaking during an interview with Richmond Confidential's editorial board last fall, has proposed that city council draft new rules to tax large-scale marijuana growers -- a move similar to one being considered by Oakland's city council. File photo by Phoebe Fronistas.

Richmond City Councilman Tom Butt, shown speaking during an interview with Richmond Confidential's editorial board last fall, has proposed that city council draft new rules to tax large-scale marijuana growers -- a move similar to one being considered by Oakland's city council. File photo by Phoebe Fronistas.

Just one week after passing its first-ever ordinance regulating medical marijuana dispensaries, the City of Richmond on Tuesday will consider joining Oakland at the cutting edge of pot law.

City Councilman Tom Butt, who last week voiced the strongest opposition to the city’s new plan to grant business licenses to medical pot dispensaries, is now proposing the city craft laws to allow, regulate and tax large-scale medical marijuana growers, similar to a controversial move that neighboring Oakland is also considering.

Oakland’s City Council will vote Tuesday night on whether to allow four large growing facilities within city limits — a move that passed a first reading last week.

In addition to regulating and taxing large-scale pot growers, Butt is also recommending that city council agree to place a measure on the November 2 ballot that would set a 10 percent tax rate for medical pot shops. All new taxes must be voted on in an election.

Currently, Oakland taxes marijuana dispensaries 1.8 percent of their gross receipts, although the city may ask voters to consider a pot tax hike this November, as well. Berkeley is also considering a ballot measure that would tax medical pot at a 2.5 percent rate.

The Nov. 2 ballot will also ask state voters to decide on Measure 19, which would legalize recreational marijuana use.

“It looks like this train is not going to stop,” Butt said of the booming medical marijuana industry. “And if that’s true, I want to make sure Richmond gets all the advantages it can out of going down that route — getting as much tax money we can from these operators.

“If we’re going to do this, we ought to do it comprehensively – not just do the part with the most benefit to the dealers,” Butt added.

Ken Estes, founder of the Grandaddy Purp medical marijuana collective, speaks about his dispensary during the July 20 City Council meeting. Photo by Ian A. Stewart.

Richmond’s City Council still has to pass a second reading of last week’s ordinance. The new rules allow for an unlimited number of medical pot dispensaries in town, as opposed to the initial plan to allow only three. The ordinance, which passed 4-3, does restrict pot shops to parts of town that are zoned for commercial use, and calls for a 1,500-foot buffer between any dispensary and a high school. Dispensaries must also prove their non-profit status, submit to criminal background checks of their managers, and provide adequate security and bookkeeping records.

New medical marijuana dispensaries are also subject to a public hearing process, in which neighbors have a chance to voice concerns to city staff.

It’s unclear how many large-scale marijuana-growing operations there are in Richmond, although Butt suggested that some do already exist.  Richmond is currently home to eight dispensaries, which are facing civil injunctions for operating without proper business permits. The new ordinance will not do anything to change the status of that litigation; rather, all dispensaries will have to submit to the same application process to acquire a new, proper license.

Councilmembers Nat Bates, Jim Rogers, Jeff Ritterman and Mayor Gayle McLaughlin voted in favor of the ordinance last week, while Butt, Ludmyrna Lopez and Maria Viramontes voted against it.

Should the ordinance pass a second reading, city staff would begin accepting applications for marijuana vendor permits within 30 days.

In his weekly e-mail blast, Butt forwarded his followers a letter sent from Richmond Police Chief Chris Magnus that took issue with several aspects of the new dispensary ordinance; primarily, that the city manager’s office (and not the police department, as Magnus recommends) will handle permit applications. Magnus also warned that dispensaries could prove vulnerable targets for crime, given the amount of marijuana and cash that flows in and out of the shops.

“I believe that as a general governing principle, it is better to start with more stringent regulations of a new business model that has the potential to be problematic — and then determine over time if those regulations should be relaxed or otherwise modified,” Magnus wrote. “It is almost impossible to strengthen lax ordinances and laws or reform already established business practices after problems are identified.”

If the council is unable to pass the ordinance’s second reading Tuesday night, the issue will have to be put on ice for a few weeks. Tuesday marks the council’s last regular meeting before breaking for August recess.

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