California has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we plan to cover who is banning, who is waiting, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your cannabis business, how to keep it legal, and what you will and won’t be allowed to do.
Our last California Cannabis Countdown post was on the County and City of San Bernardino, and before that, Marin County, Nevada County, the City of Lynwood, the City of Coachella, Los Angeles County, the City of Los Angeles, the City of Desert Hot Springs, Sonoma County, the City of Sacramento, the City of Berkeley, Calaveras County, Monterey County and the City of Emeryville.
Welcome to the California Cannabis Countdown.
Location. Santa Rosa is a city in Sonoma County. With a warmer climate than San Francisco and Oakland to go along with more reasonable home prices there’s no surprise Santa Rosa has seen a steady increase of its population over the last ten years. With its close proximity to the Russian River and all the fine dining and award winning wineries in Sonoma and nearby Napa County, Santa Rosa’s population will likely continue to grow. And who knows what business opportunities will come with the arrival of the SMART train?
History with Cannabis and Current Cannabis Laws. Santa Rosa has been making consistent progress when it comes to cannabis regulations. Perhaps not fast enough for some, but when you see what’s been going on in other parts of California (uh hum, looking straight at you Riverside), Santa Rosa is avant garde. In 2005, Santa Rosa adopted an ordinance allowing medical cannabis dispensaries. In March of 2016, the Santa Rosa City Council adopted an interim ordinance allowing commercial cultivation of medical cannabis. Upon seeing the benefits of properly regulating dispensaries and cultivators, Santa Rosa’s Department of Planning and Economic Development in August of 2016 issued an official zoning code interpretation allowing manufacturing (non-volatile), testing, distributing, and transporting within its boundaries. In order to continue stay on top of the latest developments in the cannabis industry the city of Santa Rosa also created a medical cannabis policy subcommittee that met on the last Thursday of every month. This type of forward thinking will benefit Santa Rosa in the long term (pay attention Riverside).
Proposed Cannabis Laws. In March of this year, the Santa Rosa City Council approved a resolution placing a cannabis business tax measure on the ballot to cover the City’s costs of regulating cannabis – residents will get to vote on June 06, 2017. The tax measure features the following tax structure:
- For cultivators: for the first two years (if the ballot is approved) 2% of gross receipts or $5.00 per square foot of cannabis cultivation area, at the taxpayer’s election. After two years the tax is scheduled to increase to 8% of gross receipts or $25 per square foot.
- For manufacturers: the initial two year tax rate will be 1% of gross receipts and will increase to 8% after the two year term.
- For dispensaries: the initial two year tax rate will be 3% of gross receipts (only applicable to non-medical use) and will increase to 8% after the two year term.
- For distributors: the initial rate will be 0% but distributors will be subject to the standard city business tax under Santa Rosa City Code Chapter 6-04) – after two years this rate will also be set at 8%.
Santa Rosa believes its tax structure strikes the right balance between encouraging cannabis businesses to enter the regulated market, providing tax certainty to cannabis businesses, and ensuring the city has adequate revenue to regulate its cannabis industry. With nearly 60% of Sonoma residents voting in favor of the Adult Use of Marijuana Act, there’s a strong likelihood Santa Rosa’s tax measure will pass as well. Santa Rosa has the right balance of geography (between the Emerald Triangle and the big cities of San Francisco and Oakland) and forward thinking legislators who understand the benefits of proper regulation and taxation to be an attractive destination for cannabis businesses.