MONTEREY – The city of Monterey could generate up to $ 1.3 million a year with a new cannabis tax measure proposed for the November vote.
The suggested measure, which will be considered by Monterey City Council on Tuesday night, calls on Monterey residents to decide whether the city should impose licensing taxes on cannabis companies within its limits. If approved by voters, the measure would tax retail cannabis companies at an initial rate of 4%, cannabis testing labs at 1% and all other cannabis-related businesses at 6%, with a margin of tax growth of up to 8% respectively. , 2% and 8%.
In addition to corporate tax rates, the measure would also allow higher taxes on cannabis-infused beverages containing natural or artificial sweeteners and high-potency products, those with more than 17% THC. “Dispose of products that pose a risk to public health,” a staff report prepared. for Tuesday’s City Council meeting says.
Consideration of possible cannabis rates is the first public update on the progress made on the Monterey cannabis trade roadmap since last year. Launched in the winter of 2020, the roadmap is a multi-year plan designed to guide the process of authorizing and regulating commercial cannabis operations in the city. Monterey is currently operating in Step 3 of its cannabis retail deployment: “Prepare for Release,” which involves amending the city’s municipal code to allow cannabis retail permits, the selection of retail cannabis cannabis and the development of a cannabis revenue strategy.
In December, the City Council gave staff initial authorization to develop a possible cannabis retail tax measure, along with guidance to develop a regulatory ordinance that would eventually allow a total of three cannabis retail establishments to all the city.
While Tuesday’s agenda item offers advances in cannabis retail revenue, Nat Rojanasathira, Monterey’s deputy director of the city, said Monday that progress is being made on other elements of the third stage of the city roadmap.
This includes current efforts to draft a specific master plan and zoning amendments, as well as the associated environmental review documents, for each of the commercial districts that would be affected to allow the retail sale of cannabis, Rojanasathira explained. Downtown Monterey (except Alvarado Street), Lighthouse District, and Cannery Row Business District (except Cannery Row itself) are the three commercial areas that are considered for the retail sale of cannabis, as advised by the staff. December.
Rojanasathira said modifying the city code is the first step in regulating cannabis operations in the city. Once completed, he continued, the proposed planning and zoning changes could go to the Town Planning Commission and, finally, to the City Council at the end of this autumn.
As for the actual selection of companies, Rojanasathira said the city staff has not met with any potential retailers, but is taking advantage of this summer to develop an application for proposal criteria that it will eventually send. to interested companies later this year. The city would then review and select potential retailers as early as 2023. Rojanasathira said staff have already received interest from local, regional and state cannabis retailers who want to take root in Monterey.
“This is the current timetable if the Planning Commission and the City Council move forward with each of the steps along the roadmap,” Rojanasathira clarified, adding that residents could see the opening of cannabis dispensaries in Monterey as well. as soon as next year if the roadmap doesn’t face any. roadblocks.
For the time being, as current progress is based on the revenue strategy, any proposed measure in the hope of appearing in the November general election vote must be approved by a council resolution and must be approved. present in Monterey County before August 12th. The Last Regular City of Monterey The Board meeting before this deadline is August 2nd.
If applied, Hdl Companies estimates that, collectively, the tax measure could generate between $ 604,000 and $ 1.3 million a year in the city. The figures are based on the proposed initial tax rates: 4% for retailers, 1% for testing laboratories and 6% for other industry-related businesses, raising revenue from three showcase dispensaries and a testing laboratory. cannabis. For the immediate monetary benefit of the city, the latter is already open to customers.
Laying the groundwork
While Monterey’s commercial cannabis market is still in the process, the industry is gaining momentum elsewhere with the opening of Coverton Labs, the city’s first cannabis-related business.
Last week, after years of downsizing the city, appeals to the Planning Commission, and a lengthy state approval process, Coverton Labs announced that its 10,000-square-foot test facility at Ryan Ranch is finally up and running. New business principles include promises of quick response test results and personalized guidance for each component of the cannabis supply chain. But for Coverton Labs, perhaps the most exciting opportunity is a matter of access.
“We chose Monterey County because the Central Valley has some of the largest cannabis producers and interest in cannabis in the state,” said Adrian Najara, Coverton Labs ’director of sales and marketing. “From a business perspective, there are opportunities here.”
Najara explained that Coverton Labs was an idea born out of a local need. With most cannabis testing labs based in Southern California or further north, Najara said Monterey County growers often outsourced soil and plant samples to laboratories within hours, delaying much-needed results. .
According to the requirements of the California Department of Cannabis Control, all cannabis and cannabis products must be batched in a state-licensed laboratory to determine contaminant levels and chemical profile concentrations before they can be sent to a dispensary. for sale. But when this supply chain shutdown depends on out-of-county partners, the whole process can be blocked, said cannabis industry lawyer Aaron Johnson.
“It’s nice to have a facility so close, that’s the benefit,” said Johnson, a Salinas native who now works as a partner at JRG Attorneys at Law. “Whether on the producer’s farm or in the testing lab, you don’t pay for miles. It’s all local, and that’s what we want.”
Coverton Labs is the second of two Monterey County cannabis testing labs to open this year. The first, ProForma Labs, based in Salinas, received the seal of approval from the State Cannabis Control Office in February. As for other test opportunities in Monterey County, Johnson noted the shortage.
“This is really addressing a need that the industry is facing here,” Johnson said.
Aside from filling a local gap, Coverton hopes streamlining the testing process will help growers cope as California cannabis suffers a market correction, with falling wholesale prices, high taxes and an illustrious industry. · Legal in prosperous that leaves the economy of the state pot collapsed.
“Right now, the industry as a whole is experiencing a lot of challenges.… (But) we see this as an opportunity everywhere,” Najara explained. “We are doing our best to offer the best possible prices so that (producers) can get more money through the end result.… It remains to be seen when the market will be corrected and who will stand still, but the advantage of opening the At the heart of this is the importance of knowing what they need right now and doing everything we can to help them overcome it. ”
To ensure that products meet state standards and local requirements, Coverton Labs offers a range of services, specifically potency testing, heavy metals, waste solvents and Hop Latent Viroid, a pathogen that can severely damage cannabis crops, he said. Coverton’s chief operating officer, Kris Ryan. The laboratory has a return time of 48 to 72 hours in all tests.
For now, Ryan and Najara said Coverton Labs is methodically deploying operations to ensure quality is maintained as they expand, although the couple is imagining a future operation that will serve hundreds of customers across Monterey County. . Ryan added that the lab could even expand its reach beyond cannabis testing to services for the larger farming community at some point.
“We have this huge facility that can accommodate three or up to 300,” Ryan said. “We have the ability to climb on a massive scale. Having something close to what the people of Monterey and its neighbors can depend on to get accurate and reliable data is absolutely relevant.… We are excited to bring it to the community.” .
Tuesday’s city council meeting can be viewed in person in the Monterey Council Chamber, 580 Pacific St., or online at https://monterey-org.zoomgov.com/j/1607729333. The afternoon session of the meeting will begin at 4 p.m., followed by an afternoon session at 7 p.m.