Newly elected Vice Mayor Rex Richardson submitted this new initiative to modify the tax structure in the Kelton Initiative, a grassroots effort for another measure to regulate the medical marijuana industry. Bob Kelton and other proponents from Long Beach Neighborhoods First, the advocacy group behind the citizen-driven ballot initiative, could not be reached for comment before press time.
The Kelton Initiative offered regulations on the medical-cannabis industry and proposed a tax rate of 6 percent on gross receipts. Cultivation sites would be charged $10 per square foot.
Richardson’s proposed competing ballot initiative only changes the tax rates of the Kelton Initiative.
The vice mayor strongly advocated for his colleagues on the city council to favor his proposal and clear the way for a competing initiative to be placed before voters.
“Tonight we have an opportunity to make sure that our taxable structure is set up in a way that we capture tax revenue with both medicinal and recreational cannabis in order to offset our own costs as a city,” Richardson told the council Tuesday, “and that we have the resources that ensure a public benefit.”
Richardson’s motion would establish that the gross-receipts tax for medical-marijuana dispensaries and other marijuana-related businesses would be set at 6 percent, and that the city council could increase it to a maximum of 8 percent with a majority vote. The vice mayor also proposed that recreational-marijuana dispensaries’ gross-receipts tax be set at 8 percent and that the city council could increase it to a maximum rate of 12 percent with a majority vote. Richardson also recommended that the competing initiative establish a tax rate on cultivation sites at $12 per square foot and that the council could increase it to a maximum rate of $15 per square foot with a majority vote.
Richardson emphasized that the competing initiative he is requesting would only change the tax structure of the Kelton Initiative and would leave the other sections of the Kelton Initiative untouched.
Third District Councilmember Suzie Price was pleased that the council was willing to entertain a competing ballot initiative. She had requested that the council consider a competing ballot initiative three weeks ago, but at the time, the council had not agreed to move forward with that very request.
In a phone interview a day before the council meeting, Price explained that the Kelton Initiative had proposed a different tax structure than what voters had approved two years ago. As the Signal Tribune reported in 2014, voters had already approved a tax structure on medical cannabis that was initially set a tax at 6 percent and could be increased to a maximum of 10 percent. The 2014 ballot initiative also proposed that cultivation sites could be taxed at $15 per square foot, up to a maximum of $50 per square foot. For certain nonprofit organizations, tax on the cultivation sites would initially be set at $10 per square foot under the 2014 initiative.
“And certainly, the tax aspect of it is huge,” Price said, “because!the City hasn’t come back with [an] impact report yet, but when they do, I think the public will see that this proposed initiative is going to cost the City millions of dollars, especially with this new lower tax.”
She emphasized the importance of giving the voters the opportunity to recover the tax that had already been approved.
“If we can’t recoup the costs and the tax for the sale of these products at the level that the citizens want,” Price concluded, “then it’s a complete loss for the city.”
Both the competing initiatives need to capture at least 50 percent plus one vote, however in order for Richardson’s initiative to win, it needs more votes than the Kelton Initiative, according to the city attorney’s office.
Former dispensary owner Larry King challenged the timing of this newest action by the city council. He said that the city could have saved money if they had adopted the Kelton Initiative as an ordinance without having to spend the extra dollars to place it on the ballot.
This week also marks the beginning of a new term for the even-numbered council districts. There is one major change to the personnel sitting on the council dais. Former Vice Mayor Suja Lowenthal finished her final term in service to the 2nd district, and Jeannine Pearce was sworn in this week to take Lowenthal’s district. Richardson, who serves the 9th District, was elected by his peers to take over the role of vice mayor.
King criticized the council and praised Lowenthal’s efforts.
“She stood up to them more than anybody else,” King said of the former vice mayor, “and the second she was gone, they started to undo everything she’s worked on for the last couple of years.”
King feared that a competing ballot measure would confuse an average voter.
In a phone interview Wednesday, Richardson rejected any notion that the timing of the council’s efforts to request a new initiative was directly related to Lowenthal’s departure, saying that there was “no credibility to that argument.” It did take some time for Kelton’s initiative to gather the required signatures, for the city clerk’s office to validate the signatures, and for city officials to analyze the details of the initiatives. All of this happened while Lowenthal was in office.
Richardson was asked whether the city council would be able to agree quickly upon the details of the initiative, given that there is a short window of time for the city officials to get it on the ballot for November. In response, the vice mayor highlighted the city council’s unanimous approval of his motion.
