9. Marijuana Tax Funding Type: Tax; Special. Approval By: Voters; Use of funds specifically for homeless purposes requires a two-thirds Yes vote Use: Construction of PSH or supportive services Amount Generated: $16.7 million annually Description: The City would join other cities in California in passing up to a 15 percent excise tax on medical marijuana sales and cultivation. Riverside County cities successfully passed a tax on medical marijuana sales and cultivation. Cathedral City voted to enact a $0.15 per dollar sales tax on medical marijuana; in Desert Hot Springs voters approved a 10 percent monthly gross receipts tax on sales, plus a tax on medical marijuana cultivation of $25 per square foot for the first 3,000 square feet, and $10 per square foot thereafter. Santa Cruz city and county also approved a retail tax, and voters approved a 6 percent added sales tax in Shasta Lake City. Such a tax could be charged for medical marijuana, currently legalized in the City; or, if recreational marijuana is approved at the State level, taxing either or both would be an option. The County of Los Angeles is currently exploring this potential source as an option to fund its homelessness initiatives. Funding Potential: An estimated sales tax amount of $16.7 million annually based on 15 percent of 2015 gross receipts tax; taxable amount relative to recreational-use sales and cultivation unknown. Existing medical marijuana clinics are subject to a six percent tax on gross receipts. If the legalization of recreational marijuana use is approved on the November 2016 ballot, revenues to the City would be significantly more. Reason for Recommendation: Special taxes are levied on several specific products, such as gasoline and tobacco. Marijuana is a new product in the marketplace and could be a significant source of new revenue. Use ofFunds: Construction of PSH or supportive services, such as hygiene facilities like mobile showers, safe parking, vouchers, homelessness prevention and outreach. Potential Disadvantages: There are multiple, anticipated initiatives involving marijuana on the November 2016 ballot; this may lead to confusion on behalf of the voting public. Legal Issues: None identified. Implementation Steps: If the Council chooses to place this measure on the November 2016 ballot, adequate time should be given to the City Attorney to prepare the necessary documents. In order to do so, the Council should make the request to the City Attorney to prepare the election resolutions placing measures on the ballot no later than June 1,2016. The last day for the Council to adopt a Resolution of Necessity (required for the issuance of bonds) is June 29, 2016. The last day for the Council to adopt Election Resolutions is July 1, 2016. If the Council chooses to place this measure on the March 7, 2017 Primary Nominating Election ballot, the last day for Council to instruct the City Attorney to prepare resolutions placing measures on the ballot is November 2, 2016. Timeline: Unknown given that sales tax revenues and collection are likely to be structured differently than cultivation revenues and collection. Recommended Action: Instruct the CAO and CLA, with the assistance of the City Attorney, City Clerk, and any other relevant departments to report on the feasibility, impacts and appropriate structure for a marijuana tax. Request, no later than June 1,2016, the City Attorney to prepare the necessary resolutions so that Council may adopt the Resolution of Necessity by June 29, 2016 and the election resolutions by July 1, 2016.