HomeMy WebLinkAboutOrd. 1556-2018 (18-564)City of South San Francisco P.O. Box 711 (City Hall,
` 400 Grand Avenue)
South San Francisco, CA
City Council
Ordinance: ORD 1556 -2018
File Number: 18 -564 Enactment Number: ORD 1556 -2018
AN ORDINANCE AMENDING SOUTH SAN FRANCISCO
MUNICIPAL CODE CHAPTER 6.16 TO ADOPT A CANNABIS
BUSINESS LICENSE TAX.
WHEREAS, on November 8, 2016, California voters approved the Control, Regulate and Tax Adult Use
of Cannabis Act (AUMA), which legalized the possession, use, and cultivation of non - medical cannabis
for those who are 21 years of age or older and established a state system to regulate commercial cannabis
activity; and
WHEREAS, on June 27, 2017, Governor Jerry Brown signed into law Senate Bill 94, the Medicinal and
Adult -Use Cannabis Regulation and Safety Act ( MAUCRSA), which repealed the Medical Cannabis
Regulation and Safety Act (MCRSA), incorporated certain licensing provisions from MCRSA, and
created a single regulatory scheme for both medical and non - medical cannabis; and
WHEREAS, subject to certain exceptions, MAUCRSA generally establishes a comprehensive system to
legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of
cannabis, including cannabis products, and to tax the commercial growth and retail sale of cannabis; and
WHEREAS, the City Council desires to impose a cannabis business license tax for the privilege of
operating within the City; and
WHEREAS, revenues from a cannabis business tax would be for unrestricted general revenue purposes
and go into the City's general fund and could be used for any legitimate government purpose; and
WHEREAS, Article XIIIC, section 2(b) of the California Constitution requires that any general tax for
unrestricted general revenue purposes, such as a business license tax, must be submitted to and approved
by a majority vote of the voters voting on the issue of imposing any general tax; and
WHEREAS, the tax imposed by this Ordinance is an excise tax on the privilege of conducting business
within the City and will only become effective if approved by a majority of the City's voters at the
November 7, 2017 municipal election; and
WHEREAS, based on all of the information presented at the June 13, 2018 City Council meeting, both
written and oral, including without limitation the staff reports, minutes, and other relevant materials
(hereafter the "Record "), the City Council finds that under CEQA Guidelines 15060(c)(2) and
15378(b)(4), this tax does not constitute a project under CEQA and therefore review under CEQA is not
required.
City of South San Francisco Page 1
File Number: 18 -564
Enactment Number. ORD 1556 -2018
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO,
SUBJECT TO VOTER APPROVAL, DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Incornoration of Recitals.
The City Council of South San Francisco, subject to voter approval, finds that all Recitals are true and
correct and are incorporated herein by reference.
SECTION 2. Amendments
Chapter 6.16 of the South San Francisco Municipal Code is hereby amended to add Section 6.16.037
Cannabis Business to read as follows:
Section 6.16.037 Cannabis Business.
(a) "Cannabis business" means a person issued a cannabis operator permit pursuant to Chapter 20.410.
(b) The license tax is as follows and may be adjusted by City Council by resolution or ordinance:
(1) One percent of gross receipts and up to two and a half percent of gross receipts for commercial
cannabis testing operations.
(2) One percent of gross receipts and up to four percent of gross receipts for commercial cannabis
cultivation operations.
(3) One percent of gross receipts and up to three percent of gross receipts for commercial cannabis
distribution operations.
(4) One percent of gross receipts and up to five percent of gross receipts for commercial cannabis
manufacturing operations.
(5) One percent of gross receipts and up to five percent of gross receipts for commercial cannabis
delivery -only operations.
(c) One percent of gross receipts and up to five percent of gross receipts for a commercial cannabis
business not otherwise included in subdivision (b) of this section.
(d) The license tax imposed is an excise tax and not a sales and use tax and is in addition to any other
fees required under Chapter 20.410.
(e) They payment of a tax required under this section, and its acceptance by the City, shall not entitle any
person to engage in any cannabis business unless the person has complied with all of the requirements of
Chapter 20.410 and all other applicable state or local laws. No tax paid under this
City of South San Francisco Page 2
File Number. 18 -564
Enactment Number: ORD 1556 -2018
Section shall be construed as authorizing the conduct or continuance of any illegal or unlawful business,
or any business in violation of any state or local laws.
(f) Commercial cannabis businesses operating unlawfully in the City are subject to the license taxes
under this section, in addition to any applicable penalties or fines under local and state laws.
SECTION 3. Compliance with the California Environmental Quality Act
The approval of this ordinance is exempt from the California Environmental Quality Act (Public
Resources Code §§ 21000 et seq., "CEQA," and 14 Cal. Code Reg. §§ 15000 et seq., "CEQA
Guidelines "). This ordinance imposes a general tax that can be used for any legitimate governmental
purpose; it is not a commitment to any particular action. As such, under CEQA Guidelines section
15378(b)(4), the ordinance is not a project within the meaning of CEQA because it creates a government
funding mechanism that does not involve any commitment to any specific project that may result in a
potentially significant physical impact on the environment. If revenue from the tax were used for a
purpose that would have either such effect, the City would undertake the required CEQA review for that
particular project. Therefore, pursuant to CEQA Guidelines section 15060, CEQA analysis is not
required.
SECTION 4. Severability
If any provision of this ordinance or the application thereof to any person or circumstance is held invalid,
the remainder of the ordinance and the application of such provision to other persons or circumstances
shall not be affected thereby.
SECTION 5. Effective Date of Tax
If this ordinance is approved by a majority of the voters voting on the issue at the November 6, 2018
election, pursuant to Elections Code Section 9217, this ordinance shall be considered adopted on that
date and the tax shall become effective January 1, 2019, or no sooner than 10 days after the City Council
certifies the results of the election, whichever occurs later.
SECTION 6. Voter Approval Required
This ordinance shall only become operative if the tax imposed is approved by a simple majority of voters
voting on the question at the November 6, 2018 election.
SECTION 7. Publication
This Ordinance shall be published once, with the names of those City Councilmembers voting for or
against it, in the South San Francisco Examiner, a newspaper of general circulation in the City of South
San Francisco, in accordance with Government Code Section 36933.
City of South San Francisco Page 3
File Number. 18 -564 Enactment Number: ORD 1556 -2018
Introduced at a regular meeting of the City Council of the City of South San Francisco held the 13th day of June,
2018.
At a meeting of the City Council on 6/27/2018, a motion was made by Mark Addiego, seconded by Pradeep
Gupta, that this Ordinance be approved. The motion passed.
Yes: 4 Mayor Normandy, Mayor Pro Tern Matsumoto, Councilmember Gupta, and
Councilmember Addiego
Absent: 1 Councilmember Garbarino
Attest by
Kris elli
Liza Normandy, Mayor
City of South San Francisco Page 4
CERTIFICATE OF THE CHIEF ELECTIONS OFFICER
In the matter of the CANVASS OF VOTES CAST )
at the STATEWIDE GENERAL ELECTION )
held on November 6, 2018 )
I, MARK CHURCH, Chief Elections Officer of the County of San Mateo,
State of California, hereby certify:
THAT an election was held within the boundaries of the CITY OF SOUTH
SAN FRANCISCO on Tuesday, November 6, 2018, for the purpose of submitting
Measures FF and LL to the qualified electors; and I caused to have processed
and recorded the votes from the canvass of all ballots cast at said election within
the boundaries of the CITY OF SOUTH SAN FRANCISCO.
1 HEREBY FURTHER CERTIFY that the record of votes cast at said
election is set forth in Exhibit "A" attached hereto and incorporated herein by
reference as though fully set forth at length.
IN WITNESS WHEREOF, I hereunto affix my hand and seal this 6t" day of
December, 2018, and file this date with the City Clerk of the CITY OF SOUTH
SAN FRANCISCO.
4�:O:;' �44w.."4
00000����
MARK CHURCH
Chief Elections Officer &
Assessor -County Clerk -Recorder
EXHIBIT A
COUNTY OF SAN MATEO STATEMENT OF THE VOTE Page 405 of 423
CITY OF SOUTH SAN FRANCISCO MEASURE FF (MAJORITY APPROVAL REQUIRED); CITY OF SOUTH
66
SAN FRANCISCO MEASURE LL (MAJORITY APPROVAL REQUIRED)
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1801
1,509
997
66.1
698
226
687
231
1802
1,316
947
72.0
647
242
662
219
1803
916
537
58.6
389
107
359
138
1806
2,119
1,386
65.4
975
307
959
319
1807
1,606
1,132
70.5
819
241
771
267
1810
1,585
969
61.1
680
222
646
250
1813
825
517
62.7
355
118
345
120
1814
946
558
59.0
381
139
369
151
1815
1,059
614
58.0
440
136
412
159
1816
696
464
66.7
321
111
321
108
1818
949
614
64.7
434
143
419
151
1819
1,570
1,081
68.9
747
269
733
272
1820
243
172
70.6
125
40
130
34
1821
1,777
1,229
69.2
637
319
854
280
1824
1,107
747
67.5
512
190
543
154
1833
1,295
968
74.7
670
212
663
200
1835
1,707
1,206
70.7
824
298
826
284
1837
849
605
71.3
399
167
399
153
1838
127
78
61.4
58
14
52
19
1851
317
191
60.3
139
38
130
47
1854
189
130
68.8
91
34
92
32
5809
681
419
61.5
276
115
307
85
5816
184
134
72.8
99
29
97
27
5822
886
612
69.1
426
147
418
145
5823
922
626
67.9
427
165
451
141
5825
2,236
1,328
59.4
938
30
987
244
5827
1,855
1,151
62.0
799
263
816
231
5829
1,915
1,201
62.71
826
280
863
229
5832
941
624
66.31
431
142
1
456
116
Early Voting Totals
32,327
2,904
9.
1994
679
1895
756
Absentee Totals
32,327
18,333
56.7
12769
433
12872
4050
Election Day Totals
32,32
0
0.0
0
0
0
Grand Totals
32.32
21,237
657
14763
5018
14767
4806
COUNTY OF SAN MATEO STATEMENT OF THE VOTE Page 406 of 423
Early Voting Totals
CITY OF SOUTH SAN FRANCISCO MEASURE FF (MAJORITY APPROVAL REQUIRED); CITY OF SOUTH
66
SAN FRANCISCO MEASURE LL (MAJORITY APPROVAL REQUIRED)
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14TH CONGRESSIONAL DISTRICT
32,327
2,904
9.0
1994
679
1895
756
19TH ASSEMBLY DISTRICT
11,306
962
8.5
652
230
641
236
22ND ASSEMBLY DISTRICT
21,021
1,942
9.2
1342
449
1254
520
1ST SUPERVISORIAL DISTRICT
22,707
2,135
9.4
1483
493
1389
575
5TH SUPERVISORIAL DISTRICT
9,620
769
8.0
511
126
506
181
11TH SENATORIAL DISTRICT
9,238
788
8.5
543
176
525
189
13TH SENATORIAL DISTRICT
23,089
2,116
9.2
1451
503
1370
567
BOARD OF EQUALIZATION DIST2
32,327
2,904
9.0
1994
679
1895
756
CITY OF SOUTH SAN FRANCISCO
32,327
2,904
9,0
1994
679
1895
756
JEFFERSON UNION HIGH SCHOOL
184
13
7.1
10
3
11
1
SMC BOARD OF ED TRUSTEE AREA 1
32,327
2,904
9.0
1994
679
1895
756
SAN MATEO COUNTY HARBOR
32,327
2,904
9.0
1994
679
1895
756
SOUTH SAN FRANCISCO UNIFIED 1
32,143
2,891
9.0
1984
676
1884
755
Early Voting Totals 1
32,32
21904
9.0
1
1994
679
1
1895
756
COUNTY OF SAN MATEO STATEMENT OF THE VOTE Page 407 of 423
Absentee Totals
CITY OF SOUTH SAN FRANCISCO MEASURE FF (MAJORITY APPROVAL REQUIRED); CITY OF SOUTH
66
SAN FRANCISCO MEASURE LL (MAJORITY APPROVAL REQUIRED)
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14TH CONGRESSIONAL DISTRICT
32,327
18,333
56.7
12769
4339
12872
4050
19TH ASSEMBLY DISTRICT
11,306
6,363
56.3
4458
1502
4556
1352
22ND ASSEMBLY DISTRICT
21,021
11,970
56.9
8311
2837
8316
2698
1ST SUPERVISORIAL DISTRICT
22,707
13,007
57.3
9058
308C
8983
3013
5TH SUPERVISORIAL DISTRICT
9,620
5,326
55.4
3711
125S
3889
1037
11TH SENATORIAL DISTRICT
9,238
5,160
55.9
3595
1242
3711
1083
13TH SENATORIAL DISTRICT
23,089
13,173
57.1
9174
3097
9161
2967
BOARD OF EQUALIZATION DIST2
32,327
18,333
56.7
12769
4339
12872
4050
CITY OF SOUTH SAN FRANCISCO
32,327
18,333
56.7
12769
4339
12872
4050
JEFFERSON UNION HIGH SCHOOL
184
121
65.8
89
26
86
26
SMC BOARD OF ED TRUSTEE AREA I
32,327
18,333
56.7
12769
433
12872
4050
SAN MATEO COUNTY HARBOR
32,327
18,333
56.7
12769
4339
12872
4050
SOUTH SAN FRANCISCO UNIFIED
32,143
18,212
56.7
12680
431
1
127861
4024
Absentee Totals
32,32
18,333
56.7
12769
433
1
128721
4050
COUNTY OF SAN MATEO STATEMENT OF THE VOTE Page 408 of 423
Grand Totals
CITY OF SOUTH SAN FRANCISCO MEASURE FF (MAJORITY APPROVAL REQUIRED); CITY OF SOUTH
66
SAN FRANCISCO MEASURE LL (MAJORITY APPROVAL REQUIRED)
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14TH CONGRESSIONAL DISTRICT
32,327
21,237
65.7
14763
5018
14767
4806
19TH ASSEMBLY DISTRICT
11,306
7,325
64.8
5110
1732
5197
1588
22ND ASSEMBLY DISTRICT
21,021
13,912
66.2
9653
3286
9570
3218
1ST SUPERVISORIAL DISTRICT
22,707
15,142
66.7
10541
3573
10372
3588
5TH SUPERVISORIAL DISTRICT
9,620
6,095
63.4
4222
1445
4395
1218
11TH SENATORIAL DISTRICT
9,238
5,948
64.4
4138
1418
4236
1272
13TH SENATORIAL DISTRICT
23,089
15,289
68.2
10625
3600
10531
3534
BOARD OF EQUALIZATION DIST2
32,327
21,237
65.7
14763
5018
14767
4806
CITY OF SOUTH SAN FRANCISCO
32,327
21,237
65.7
14763
5018
14767
4806
JEFFERSON UNION HIGH SCHOOL
184
134
72.8
99
29
97
27
SMC BOARD OF ED TRUSTEEAREA 1
32,327
21,237
65.7
14763
5018
14767
4806
SAN MATEO COUNTY HARBOR
32,327
21,237
65.7
14763
5018
14767
4806
SOUTH SAN FRANCISCO UNfFIED 1
32,143
21,1031
65.7
1
146r>41
4989
1
14670
4779
Early Voting Totals
32,32
2,904
9
67
1895
756
Absentee Totals
32,32
18,333
56.7
4339
12872
4050
Election Day Totals
32,32
0
0.0
LJ12769
0
0
Grand Totals
3232
21 237
657
5018
14767
4806
CITY OF SOUTH SAN FRANCISCO MEASURE LL
CITY ATTORNEY'S IMPARTIAL ANALYSIS (711
Measure LL is a ballot measure that, if approved by the voters, would authorize a &ftabis business
license tax to be imposed for the privilege of operating a cannabis business within;t��tity of South San
Francisco ("City"). The City's current business license taxes apply to all businesses';pp- ating in South
San Francisco, and businesses not assigned a specific business license tax rate mu*'p a general license
tax rate of $75 per business plus $15 per employee. Measure LL would amend thel:61Is business license
tax only as applied to commercial cannabis operations. The business license tax w e based on a
percentage of gross receipts of sales and would vary based on the type of permitter c,',rcial
cannabis use. tD
fN
If approved, Measure LL would authorize the City Council to set the business license tax for all types of
commercial cannabis operations permitted within the City at a minimum rate of 1% of gross receipts.
Additionally, Measure LL would establish the following maximum rates for permitted cannabis uses: a
maximum of 2.5% of gross receipts for Testing, a maximum of 49/6 of gross receipts for Cultivation,•a
maximum of 3% of gross receipts for Distribution, a maximum of 5% of gross receipts for
Manufacturing, and a maximum of 5% of gross receipts for Delivery -Only, as those particular uses are
defined in Chapter 20.410 of the South San Francisco Municipal Code.
Measure LL is an excise tax that would generate approximately $400,000 to $700,000 of additional
annual revenue for unrestricted purposes. Measure LL is not a sales tax and would not be imposed
directly on consumers, but rather on commercial cannabis businesses. Because Measure LL does not
limit the use of tax revenue generated by this tax to specified uses, it is a general tax. Therefore, the City
may use the funds for any legitimate governmental purpose. If approved by the voters, the tax will be
deposited into the City of South San Francisco's General Fund and may be used to pay for and maintain
parks and recreation facilities, transportation and infrastructure improvements, and public safety within
the City.
A "Yes" vote is a vote to approve a business license tax on all permitted commercial cannabis uses for
the privilege of operating a cannabis business in the City. A "No" vote is a vote against adopting a
business license tax specific to cannabis uses. Measure LL would be approved if it received a majority
of "Yes" votes.
on R ei ,City Attorney