Marijuana sales ordinance needs more research
As an answer to the projected shortfall in the City of Benicia’s budget, the majority of the Benicia City Council is proposing the legalization of retail recreational (non-medical) marijuana in our community to boost tax revenue.
However, this proposal is being made with no study or research being done on economic impact or risk. The City Council is willing to pay for studies on an outdoor noise ordinance, but has not done their due diligence on this proposal.
Until the City Council has some data to share with the citizens who have shown up at various meetings and requested it, I respectfully ask the Benicia City Council to wait on this proposal until it can conduct its own economic impact study and risk analysis.
Currently, according to an Oct. 2 article in the East Bay Times, many cities in the Bay Area are postponing January 2018 retail (non-medical) marijuana sales including Antioch, Berkeley, Brentwood, Concord, Daly City, Danville, Dublin, East Palo (likely no), Fremont, Martinez, Menlo Park, Mountain View, Oakland (unclear), Palo Alto (likely no), Pittsburg, Pleasanton, Redwood City (likely no), San Francisco, San Jose (unclear), San Mateo, San Ramon, Sunnyvale, Union City (unclear), and Watsonville. Unconfirmed reports indicate Vallejo plans to prohibit retail sales.
Some of these cities already have medicinal dispensaries, but are postponing allowing recreational sales until further research is conducted. Why is Benicia not doing the same?
For review, I have calculated the estimated annual revenue per dispensary using a mix of cannabis industry data, Benicia data and examples from other communities in the greater Bay Area:
* According to the 2016 Marijuana Business Factbook, marijuana dispensaries produce an average annual revenue per square foot of $974. That is more revenue than the average square foot of a Whole Foods store. Let’s assume that is true.
* The average square foot of available retail space in Benicia is 1,500.
$974 per square foot x 1,500 = $1,461,000 gross revenue for the cannabis entrepreneur.
* Assuming Benicia places a 10 percent tax on marijuana sales in 2018, which is very likely, plus 1 percent from Benicia Measure C, that comes out to $160,710 ($1,461,000 x .11) in annual revenue for Benicia. (It’s important to note that to generate this revenue per square foot, the retail marijuana dispensary would have to be located in a high traffic retail neighborhood, such as First Street, Solano Square, Columbus Parkway, Southampton (Raley’s) Shopping Center.)
As demonstrated in the states where marijuana is legal, there are costs that will inevitably arise. Considering the cost for city staff time, local police presence, code enforcement, marijuana business compliance, marijuana business financial audit services, and more drug education and counselling, can Benicia afford to permit retail marijuana sales on a budget of $161,710 a year? That is an important question as public health and safety is the number priority of every elected official.
For those that question my calculations and assumptions, allow me to share the story of Campbell, Calif. as reported in the San Jose Mercury News on Oct. 5. A community much like ours, with a population of 39,349 according to the 2010 U.S. Census. After much deliberation, the City Council of Campbell decided to postpone their decision to permit retail marijuana sales. Why? Because that City Council did their homework and determined the cost to cover city expenses would be nearly a million dollars, and the estimated revenue from three (3) dispensaries would be $260,000 in the best-case scenario. That’s a negative return on investment (ROI) of 73 percent.
This is a decision that will have a very noticeable impact on our community, and the Benicia City Council should be treating this issue with the importance that it deserves, not rushing through a vote with no data, research or more community outreach. Again, I ask that the City Council postpone this vote until further studies can be done.