Endorsement: Measure X to tax commercial cannabis

For Sonoma this Nov. 3, it’s safe to say: X marks the spot.

What spot? Well, the spot at which pro-cannabis and anti-cannabis, pro-dispensary and anti-dispensary, pro-Measure Y and anti-Measure Y voters should all probably agree.

Commercial cannabis is legal in Sonoma – and like most other goods, it should be subject to reasonable taxation.

But where other sales taxes are typically channeled through the state before a percentage is funneled back to local jurisdictions, the state allows local governments to collect taxes directly from cannabis businesses.

And, like any newly proposed tax in California, it needs voter approval.

Sonoma, meet Measure X.

Measure X was approved for the ballot by the Sonoma City Council last year, following the establishment of the city’s cannabis ordinance which, for the first time, allows for commercial cannabis businesses in the city.

Measure X calls for a tax on all commercial cannabis and hemp businesses in the city, in an amount “not to exceed 4 percent of gross receipts” annually, according to the ballot language. It needs a simple majority to pass.

The city estimates the tax will bring about $200,000 annually into the General Fund.

The city council can adjust the rate yearly, if it so chooses, so long as the rate does not exceed 4 percent. And different business types in the cannabis industry can be taxed at different rates. Sonoma’s proposed ordinance includes several such tiers, including maximum rates of 4 percent for retail dispensaries, 4 percent for cultivation facilities that exclusively use artificial lighting, 2.5 percent for facilities that use any amount of natural lighting, 2 percent for testing labs, etc.

As a point of comparison, Santa Rosa’s tax on adult use dispensary cannabis is 3 percent; San Francisco’s is 2.5 percent. Even if Sonoma’s were at its maximum of 4 percent, it generally falls in line with other commercial cannabis friendly municipalities in the Bay Area.

Under Measure X, there is no tax levied on consumers at point of sale, though there’s nothing to stop a cannabis business from passing on its burden of the tax through the retail price of its products. Personal cultivation or use is not subject to the tax.

The ballot argument in favor of the tax, signed by all five members of the city council, says the estimated $200,000 in annual revenue will be used to help fund public safety, emergency preparedness, roads, recreation, parks and other essential services.

There are no arguments in opposition of the tax on the ballot, and the Index-Tribune is unaware of any organized opposition to the measure.

For those wondering if the fate of Measure Y on the Nov. 3 ballot should weigh in any consideration of Measure X, the answer is: It shouldn’t.

Measure Y is an initiative calling for looser restrictions on commercial cannabis and personal cultivation in the city. Whether it passes or not, commercial cannabis is legal in Sonoma.

Measure X’s rates are well in line with other jurisdictions. And its estimated $200,000 in revenue would provide a much-needed boost to the General Fund, for parks, roads, emergency preparedness and other essential services.

We recommend a “yes” on Measure X.

Jason Walsh, editor & associate publisher

Emily Charrier, publisher