16 Jul Cannabis Business Tax Will Be on San Pablo Ballot

(Screenshot captured by Samantha Kennedy / The CC Pulse)

By Samantha Kennedy

Faced with a nearly $9 million deficit over the next three years, the San Pablo City Council is expected to remove certain regulations prohibiting cannabis retailers — if voters pass a cannabis business license tax in November. 

The tax, which officials believe will pass given widespread community support, is estimated to generate between $1.5 million and $2.2 million annually. 

Council members on Monday unanimously passed a resolution placing the tax on the ballot. 

“We know that from a market standpoint…there is sufficient capacity for us to focus on establishing a business license tax for commercial cannabis retail,” said City Manager Matt Rodriguez. 

Despite the oversaturation of cannabis retailers in nearby Alameda County, retailers in Contra Costa County are much more scarce and would allow San Pablo to capture revenue from customers between the Carquinez Bridge and Albany. 

Gross receipts could be taxed up to 7% based on the measure’s language, but recommendations by consultants and comments by council members and staff show that a 5% tax is likely to be the initial rate that will best create revenue and attract business.

Up to three cannabis retailers could initially be allowed to operate and be subject to the tax, according to City Attorney Brian Hickey. 

The San Pablo City Council and a majority of its voters have sometimes disagreed on cannabis policy, notably when most San Pablo voters voted in support of Prop. 64, which legalized cannabis use for adults 21 and over, but council members wrote a letter rejecting the measure. 

“It’s good that we’re reconvening this conversation,” said council member Abel Pineda, acknowledging the differing stances between previous councils and their residents. “We also see this as a place of opportunity . . . to diversify our revenue streams and wean our dependency from one entity that funds a majority of our city funds.” 

Much of San Pablo’s revenue comes from the San Pablo Lytton Casino, which is projected to account for around 46% of its general fund budget in each of the next two years. Revenue from the casino has been less than estimated, however, creating a shortfall of about $700,000 since the 2022-23 fiscal year. 

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Budget constraints led officials to implement a full-time employee hiring freeze at the beginning of 2024, which could also happen during the deficit years of 2025 to 2027, and look for other revenue streams such as cannabis retailers. 

Council member Elizabeth Pabon-Alvarado and Vice Mayor Arturo Cruz were supportive of placing the tax on the ballot but were curious about how retailers might contribute to crime in the area. 

Cruz referred to the burglary of a cannabis facility that resulted in the death of Oakland Police Officer Tuan Le, while Pabon-Alvarado asked about DUIs in areas with retailers. 

Pineda, who previously did work related to cannabis legislation, felt regulating cannabis and its retailers was the safest thing to do for the community. 

“I think that education and regulation versus criminalization and incarceration is definitely a better approach,” he said. 

If the tax passes, council members will develop a more specific regulatory framework.

The next regularly scheduled San Pablo City Council meeting is Aug. 5.