Business & Real Estate

LA council hashes out next steps for retail sales of cannabis

Retail and delivery cannabis shops could soon be budding in Los Altos after the city council directed staff to conduct outreach and prepare an ordinance on taxing marijuana businesses.

After Proposition 64 legalized recreational cannabis in November 2016, the city adopted an urgency ordinance to temporarily prohibit medicinal and adult-use commercial cannabis sales within city limits. Since then, the council asked staff to research allowing cannabis businesses in Los Altos and imposing a local tax on them.

At the May 8 council meeting, City Attorney Chris Diaz reviewed options for allowing cannabis businesses. According to Diaz, the Bureau of Cannabis Control, which is responsible for issuing licenses, has a few different options, including retailer, non-storefront retailer (a brick-and-mortar shop that solely takes orders for delivery) and microbusiness (which includes the cultivation of marijuana).

While the state has the power to levy a tax on such businesses – currently an excise tax of 15 percent of the average market price – city governments also may pass a local tax. Diaz advised the council to consider a general tax – which requires 50 percent voter approval – that would be a 10 percent gross receipts tax, per staff’s recommendation.

Let voters decide?

Right off the bat, Mayor Jean Mordo said he wanted the city only to allow commercial cannabis sales in the Central Thoroughfare (CT) zone that runs through El Camino Real. But Councilwoman Jeannie Bruins wondered why El Camino was more appropriate and questioned why they should discriminate against other business districts in Los Altos.

Councilwoman Jan Pepper responded to Bruins, citing Mountain View’s recent action on the issue.

“When we talked about this last time, we had information that Mountain View was going to be allowing some kind of business on El Camino,” Pepper said. “If there’s already going to be this kind of business on El Camino – and people probably don’t know what’s Mountain View (and) what’s Los Altos – we might as well allow them to conduct the same kind of business one block away.”

At that point, Mordo proposed a motion that the council allow two establishments of retail – with no on-site consumption – as well as non-storefront delivery. He also said he’d like to ban the option for temporary events or microbusinesses and not place a tax on the upcoming ballot.

But Pepper asked why they wouldn’t consider a tax, given that it would be a source of revenue for the city.

“It’s a service to the Los Altan potheads,” Mordo joked. “Essentially we can do a tax, too, but it’s a bigger consideration.”

Diaz said he would have to review whether they could implement a tax later if the council decided to nix the idea now and let businesses operate without it.

“One option that the council could choose, if you just wanted to test the waters, you could put on the ballot measure a tax question and just let it ride and see what the outcome is,” he said.

Councilwoman Mary Prochnow agreed with Diaz, noting that the best kind of outreach they could do is to let residents decide via the ballot box. To qualify for the November ballot, City Clerk Jon Maginot said the council would have to adopt an ordinance for the ballot measure by July.

The council agreed to direct staff to move forward with an ordinance for the tax and to conduct a poll among residents to gauge their opinions on commercial cannabis sales in Los Altos.

For more information, view the May 8 council meeting minutes at losaltosca.gov/citycouncil.

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