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.
Lionel Largaespada,
Benicia
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Very good article. With very good facts. Correct, what is the hurry.
Ahhh … a business person rises up and quantifies the situation. Beyond emotion and “let me smoke pot because it makes me feel good” crowd, there may actually be a legitimate financial reason to tapping the brakes on pot stores.
This is a good letter and presents a real argument to slow down the process.
City Council has shown a proclivity in making bad decisions. Do I need to remind everyone about the water charges issue? I don’t have faith in council to decide intelligently.
Great input Lionel. Common sense for sure. Unfortunately our city council has a complete lack of it and financial concerns or concopt of cost justification are not elements they consider. It is all a feel good for them.
A prohibitionist speaker at a recent public hearing asserted that regulating cannabis will lead to “consequences you never thought of”. I cannot find a single example of a city/town regretting regulating and taxing cannabis.
Here is a great article about CO Governor that flipped after he saw it was GOOD for his state, with benefits far greater than harm. Now he asserts he is “real close” to believing legalization is BETTER than prohibition. Who would have thought?
https://tinyurl.com/jbbusp7
Here is the Gallup poll referenced by Thomas Petersen, demonstrating the “generational shift” of attitudes towards cannabis he mentioned previously.
“Majority of Republicans Now Support Legalizing (Cannabis)”
https://tinyurl.com/ybseyzgn
Lionel does a fair job of estimating revenue, however, fails to estimate the cost of city staff time, local police presence, code enforcement, marijuana business compliance, marijuana business financial audit services, and more drug education and counselling, or even defining or confirming the need for these. This whole tax issue is a bit of a red herring, as far as a I see it.
He failed to address revenue from wholesale supply chain operations in BIP. The Vice-Mayor has met with former Wall Street professionals that are now in the cannabis industry.. They projected millions in revenue from local regulated activity. Quite a contrast from Lionel’s guesstimates.
“The next city council needs to actively seek out compatible companies with taxable goods and/or services that will become part of the public-private partnership that will exist in renovating the existing park,” – Lionel in 2016 interview before election day.
Actually, cannabis business interests are contacting Benicia about leasing space in BIP. All we have to do is hold the door open and count the money from robust wholesale and retail activity fees and taxes. My vision is to use cannabis revenue to roll back our new water rates that are impacting every one of us, especially those with limited financial resources. What kind of person would be against that?
True. Valid points Mr. Petersen.
As a non-user, and one who believes intoxicant use is the right of the individual, I do also want to challenge the pro pot crowd in selling a net benefit scenario to the community.
Pot is an intoxicant. As a result, it will cause problems. It will cost money, net overall, for Benicia to enact regulations. Those that are attempting to sell pot sales and farming as a Panacea are selling snake oil solutions.
People are free to use the substance. Use it! But don’t try to convince us that this thing will be a net positive for Benicia.
Final note: I am pleased that city council has found one form of business that they can support.
What’s with the mask? Because your stodgy opinions are the minority, and don’t “matter”?
Ahh … struck a nerve have I?
“Pot is an intoxicant. As a result, it will cause problems.” Matter maybe, however, these “problems” already exist, regardless of legalization or sales. BTW – These “problems” have had 0 observable negative consequences on me or anyone I know, and/or on my surrounding community.
Those that fear permitting of “A” license activity will “change Benicia forever” fail to grasp that MOST of the consumption in any town is dominated by adult-use acquired under Prop. 215. It’s happening now all over Benicia, or there are a lot of unwell residents in our town, making smoke up and down First Street and side streets. Industry analysts expect recreational sales to be the biggest market, and cities that ban it cannot have any of the grant funds generated by the excise tax.
The half-baked analysis offered here yesterday did not consider those funds, along with absent data from supply chain ops at BIP. People in the industry tell me there is going to be competition for cultivation/processing space since a lot of harvest was lost in the fires. Today’s cultivators can harvest up to SIX times a year indoors, producing 50g/ft2 canopies.
Basically, the more excise taxes we generate, the larger the portion of grant funds that will come back to us specific to police, fire, and assorted public health and education programs. Who could be against that?
Sounds good Stan. Show us the specifics in the new state law. That would be helpful. Thank you.
Stan the revenue is at the BIP not retail sales of Recreational Cannabis. I think you will find that anti recreational cannabis retail sales folks do favor Medical cannabis delivery to Benicia with a lot of vetting. No fly by night group will be allowed. Registered and they could pay a very nice fee to the City of Benicia. Everyone who gets medical cannabis now will continue to be able to get it just as they are getting it now..
By your response you admit it will likely add to problems while benefiting zero. My point exactly.
No. Not exactly, but , no matter.
It does appear the pro Recreational Cannabis folks which there appears to ,be 2/3 on this run are on the run. I do believe many think that the Benicia Industrial Park is a good place for cannabis business but not good for retail. With a 5/10% tax on the cannabis business in the BIP it could well be a very good move. You get revenue without the issue of sales tax. It is a business to business movement of a product. If it is revenue and that is what the Vice Mayor wants there is only one way to go. The BIP. I think the one thing the pro recreational cannabis folks {Just two on this run maybe three} miss is it did pass easily in California. Now the residents, city’s and county’s are saying no to retail recreational cannabis. We all must remember Vallejo had close to forty Medical Cannabis store and now are down to eleven with more zoning restrictions coming. At present there will be no Recreational Cannabis stores in Vallejo. So as you see the writer is correct. Just what is the hurry. There is no hurry.
Looks like “increased promiscuity in our town” will be added to the list of concerns from the prohibitionists.
https://tinyurl.com/ybs3fpch
“But more research must be done to better understand these findings”, lol.
I hope Stan that you are not saying Recreational Cannabis increases the number of sexual partners. If that is the case you may have just shot down your recreational cannabis desire. I have never seen promiscuity discussed in this city openly about recreational cannabis. Yes I do agree more study’s must be done.
Stan I have a question for you. Will it be legal to tote onsite at a micro cannabis store?
Something that struck me as very strange. Why does the Planning Commission lead by Chairperson Birdseye want a Micro Cannabis business in the Lower Arsenal. If I am reading that correctly. Micro Cannabis business welcomes customers to consume on site. I find that very strange. Maybe we can now hold meetings on site and consume at the same time. Just kidding put an explanation by the Chair of the Planning Commission would be very helpful. Looking forward to that explanation. Thank you.
Here’s Santa Rosa Planning Commission throwing water on hair-on-fire rhetoric from prohibitionists about insufficient community outreach re: cannabis. The results of Prop. 64 was sufficient, among other considerations.
“It makes sense to treat the same product the same, regardless of what it’s used for.” – PC member.
Vice-Mayor Young made a similar observation several months ago, sustained by the consultant hired to facilitate a community cannabis workshop. Analysts expect revenue from adult-use sales to outrun medicinal sales by several orders of magnitude.
https://tinyurl.com/y7ckcgw4
This city is taking the same stance as Santa Rosa. Both cities need Council approval. In the case of Benicia it must have three voters. So as you see Stan if three are recused and one is put back in by a straw pull all three will have to approve. A 2/1 vote is a no vote a 2/2 is a no vote only a 3/2 vote is a yes vote. We shall see Stan. But I hope you are following this very closely. Outreach including the Planning Commission has come up with recommendations to the city council., We shall see Dec. 5th.