Shall the City adopt an ordinance imposing a general tax on cannabis businesses, including hemp, not to exceed $12.00 per canopy square foot for cultivation (adjusted for inflation), 6% of gross receipts for retail, and 4% for all other businesses; estimated to generate $350,000 to $700,000 annually for Tracy until voters change or repeal it, to fund core City services such as public safety, public works, parks, and community services?
(MAJORITY 50% +1 APPROVAL REQUIRED)
Measure W Frequently Asked Questions
1. What is a proposed general tax on cannabis businesses?
Measure W would support adoption of a local sales tax on cannabis businesses not to exceed $12 per canopy square foot for cultivation, up to 6% of gross receipts for retail, and up to 4% for all other businesses. If approved, the proposed general tax would provide funding, that cannot be taken by the state, to maintain local services including police, fire prevention, emergency services; street, median, and park repair/maintenance; senior/youth services; planning and business retention/attraction; building facilities (such as parks/sports fields).
2. Why did City Council put Measure W on the ballot?
This tax measure is a general tax and requires a majority approval (50% plus 1 or more) from the voters. The City Council received a report from City staff demonstrating the City would need financial resources to mitigate the potential impacts from passage of Proposition 64, the Adult Use of Marijuana Act. Specifically, City staff anticipates that tax on cannabis may be necessary to fund the health and public safety costs resulting from the legalization of cannabis.
3. How much revenue is Measure W anticipated to draw?
If the proposed General Tax on cannabis is approved by a majority of the voters (50% plus one or more voters), the proposed sales tax be collected starting in January 2021. The proposed cannabis sales tax would generate approximately $350,000 to $700,000 annually for Tracy until voters change or repeal it.
4. Can Measure W funds be earmarked for special projects?
No. Because the proposed cannabis tax is a general sales tax, it will not earmarked to fund a specific operational area or capital project. The revenue raised from the tax would go into the City's General Fund and could be used for any municipal governmental purpose. Municipal governmental purposes include, but are not limited to: police (patrol, 911, command, gang and narcotics enforcement, crime investigations, other police services); fire protection, emergency services, and other fire services; support services, street median, and park repair and maintenance; senior and youth services; planning and business retention and attraction; building facilities (such as parks and sports fields); and other general services.
5. If passed, will the community be able to see how the proposed cannabis sales tax on cannabis businesses are spent?
Yes, the City has separate revenue accounts to track revenue sources within the General Fund. City budget information is available at www.cityoftracy.org.
6. If passed, will there be oversight of the funds collected through Measure W?
If approved, the City’s independent auditors will be required to complete a financial audit report, by no later than December 31st of each year, which will include the revenue raised and expended by this tax.
7. What happens if Measure W does not pass?
Cannabis businesses will be allowed to operate in the City regardless of the general tax with the application process planned to start on September 1st. In order to operate a cannabis business in Tracy, a business must obtain a City Cannabis Business Permit, a conditional use permit (land use permit) and a State cannabis license from the appropriate State cannabis regulatory authority such as the California Bureau of Cannabis Control.
8. Who decides how the revenue from the proposed cannabis tax is spent?
Through the budget process, the City Council will decide (based on community need) how funding will be earmarked for City operational or capital needs, such as public safety services and facilities, youth and senior programs, roadway improvements, and the maintenance and operations of recreation facilities.
9. What types of services or resources will this tax apply to?
If approved, this revenue would provide funding to maintain local services and improve facilities, including police, fire protection, emergency services, street, median and park repair/maintenance, senior/youth services, planning and business retention/attraction, and building facilities (such as parks/sports fields).
10. Is the City of Tracy advocating for Measure W?
No, the City is prohibited by law from advocating in favor of the measure. Providing information about Measure W, its intended uses, and other factual information is permissible.
11. Why is the City putting a cannabis sales tax measure on the ballot if the City has a healthy reserve level?
Yes, we currently have a healthy reserve level. However, the City is operating at a deficit and reserves are being used to maintain the City’s budget balanced.
12. Who pays the cannabis tax on cannabis businesses?
Only those purchasing cannabis at a dispensary or cannabis businesses pay this tax. General members of the community who do not purchase, cultivate, test or process cannabis will not pay any additional taxes.
13. Do other jurisdictions tax cannabis?
Yes. Cities across California tax this industry at different rates, with rates up to 15 percent of gross receipts.