HomeMy WebLinkAbout03-14-2017 Item 1, Dietrick (2)Council Memorandum
I. -MEETING.-
CT3Ul�iCr
s ITEM NO.:— 2 '�
March 14, 2017
TO: Mayor and City Council
FROM: Christine Dietrick, City Attorney
VIA: Katie Lichtig, City Manager 1
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SUBJECT: Marijuana Regulation:
Response to Question Regarding City's Eligibility for Grants
"ECE-
MAR 14 2017
SLO CITY CLERK
The City Attorney's Office received an inquiry regarding the City's eligibility for grants to assist
with law enforcement, fire protection or other local programs addressing public health and safety
associated with the implementation of Proposition 64, if the City banned commercial cultivation,
but chose to permit retail sales of marijuana.
It is not entirely clear from the statues enacted by Prop 64 exactly how the grant prohibition would
work if the city banned only commercial cultivation but allowed retail activity. There are 2 taxes
(excise taxes on retail sales and cultivation taxes based on dry weight of harvested marijuana
products), but both are combined into one fund, the Marijuana Tax Fund, under Revenue and
Taxation Code Section 34018(a). The cultivation tax does not apply to marijuana cultivated for
personal use under Health and Safety Code Section 11362.1 or by a qualified patient or primary
caregiver under the Compassionate Use Act. (Revenue and Taxation Code Section 34018 (j)). The
statutes do not state whether taxes will be segregated for grant purposes.
The prohibition on grants is found in a subsection of the statute creating the Marijuana Tax Fund.
Revenue &Taxation Code Section 34018(f)(3)(C) states, with regard to 20% of the tax money
left over after multiple mandated distributions to state agencies:
"To the Board of State and Community Corrections for making grants to
local governments to assist with law enforcement, fire protection, or other local
programs addressing public health and safety associated with the implementation
of the Control, Regulate and Tax Adult Use of Marijuana Act. The board shall not
make any grants to local governments which have banned the cultivation, including
personal cultivation under paragraph (d)) of subdivision (b) of Section 11362.2 of
the Health and Safety Code, or retail sale of marijuana or marijuana products
pursuant to Section 26200 of the Business and Professions Code or as otherwise
provided by law".
H & S 11362.2, prohibits any city or county from completely prohibiting persons from indoor
cultivation of no more than 6 plants per residence, but allows cities and counties to ban outdoor
cultivation for personal use.
Response to Question Regarding City's Eligibility for Grants Page 2
The above language could be interpreted as prohibiting any grants if either activity is banned, since
segregation into sub -funds for grant purposes is not mandated. However, it could be argued that it
is not logical to interpret the statute to prohibit any grants from taxes generated by permitted retail
sales if commercial cultivation is prohibited, especially because most, if not all, commercial
cultivation of any crop is done in counties, outside incorporated areas.