1-15-22
Dear Town Council,
The LGCA is writing to you to express our recommendation regarding Agenda item #10 – Cannabis Consultant Services.
Recommendation
We recommend not to proceed with spending $50,000 to retain a consultant to perform a cannabis fiscal analysis given 60% of the respondents to the Town’s survey opposed/strongly opposed such a measure (see attached survey result). When deducting those opposed from those supporting, this leaves a net negative percentage of 22%.
Given this very strong anti-cannabis sentiment, the Town Council should expect a highly contested election if a Cannabis Sales Tax Initiative is placed on the ballot. It would require the approval of voters to impose any sales tax. Such an overwhelming negative level strongly suggests that a cannabis sales tax initiative would lose by a very large margin. Spending the public’s money for a fiscal analysis of a cannabis sale tax measure, which is highly likely to be rejected by voters, is a waste of public funds.
Background
It is important to remember the suggestion to examine the commercial sale of cannabis did not arise from the public during the Council Priority Setting Session. In fact, of the 175 suggestions for new priorities submitted by the public as part of last year’s Priority Setting Survey (see attached), no one from the public put forth a suggestion to change the municipal code to allow for the commercial sale of cannabis.
This work stream was put forth by the then Town Attorney as part of his 2021 priorities. A Commercial Cannabis Operations and Facilities Ordinance was listed as #7 on the Town Attorney’s recommended list of municipal codes that “needed updates”. The stated reason for pursuing this workstream was solely for the additional sales tax revenue that could be levied on the commercial sale of cannabis. To further justify the workstream, the Town Manager noted that the priority would be “consistent with the council priority of Prudent Financial Management”. Based on the Town Attorney’s recommendation, Council then directed Staff to seek public opinion on this issue. The public has clearly spoken – they are strongly opposed.
Discussion
Given the survey results, we are bewildered by the Staff’s recommendation to spend $50,000 to hire a consultant. The notion of performing a fiscal analysis of cannabis sales taxes is doubly troubling at this time given the tremendous uncertainty with respect to the tax and regulatory framework that has been introduced in Governor Newsom’s budget proposal. In his proposal, he states that he, “supports cannabis tax reform and plans to work with the Legislature to make modifications to California’s cannabis tax policy to help stabilize the market.” These modifications are widely understood to mean a significant reduction in cannabis taxation, which would make a fiscal analysis at this time premature at best, and probably meaningless in the final analysis.
If the Town truly has $50,000 available to spend, the LGCA recommends that this money be spent on hiring a consultant to do a fiscal impact analysis (FIA) of the 2040 General Plan. The LGCA survey of 400 voters in Los Gatos regarding the draft 2040 General Plan shows 87% support/strongly support a FIA (see attached). The net support for a FIA is an overwhelming positive 78% compared to a negative 22% on the commercial sale of cannabis.
The LCGA has repeatedly made the recommendation to Staff to complete a FIA of the 2040 General Plan prior to adoption. Many cities in California routinely perform a FIA as part of the general plan approval process to fully inform the Town Council and public of the revenue, expenditure and capital investment impacts flowing from the adoption of a 20-year plan. Our recommendation has been repeatedly rejected, citing the lack of funding for a FIA. We believe the Town cannot afford not to do such an analysis, especially given that the draft 2040 General Plan calls for a 30% growth in the Town’s population.
Conclusion
We respectfully ask the Council to not proceed with the Staff recommendation and instead instruct the Staff to retain a consultant to perform a FIA for the 2040 General Plan. This is a much higher use of public funds and would greatly benefit the public in understanding the fiscal impact of the draft 2040 General Plan.
Thank you for your consideration.
Los Gatos Community Alliance
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