What a proposed marijuana tax could look like for Grover Beach

Grover Beach's marijuana tax by the numbers

Grover Beach will consider taxing marijuana businesses this November. Here's a quick look at the city's proposed tax measure.
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Grover Beach will consider taxing marijuana businesses this November. Here's a quick look at the city's proposed tax measure.

For the past month, Grover Beach has been mulling the idea of capitalizing on a possibly lucrative business in San Luis Obispo County: marijuana sales.

The discussion started in early July and at that time was mostly focused on taxing medical cannabis sales at the medical marijuana businesses that have applied to open up in the city. However, now the question has expanded to include recreational marijuana as well, as many expect voters to approve a state recreational initiative this November.

At its meeting Monday, the Grover Beach City Council will take a final look at a proposed city marijuana tax measure before putting the initiative on the Nov. 8 general election ballot. Here is a look at what that measure could look like, based on the draft measure provided to the council in advance of Monday’s meeting. It could still change Monday night, depending on public and council comments.

What to know

When it comes to the potential measure, the numbers to know are: $25 per square foot for the first 5,000 square feet; 5 percent; 10 percent; and $1 million to $2 million.

The first applies to how the city plans to tax commercial cannabis growing. Rather than going for a sales tax, the city’s draft measure charges nurseries by how much space the plants occupy (also called the “canopy”). Depending on how large a canopy the business is licensed by the state to operate, the city would charge $25 per square-foot for the first 5,000 square-feet of canopy and then $10 per square-foot for the remaining canopy.

The two percentages are tax rates for medical and recreational marijuana businesses, respectively.

The city would tax medical marijuana businesses 5 percent of their gross receipts, while upping the tax rate to 10 percent for recreational marijuana businesses. If the state legalization initiative succeeds, local recreational marijuana businesses also would pay an additional 15 percent sales tax to the state.

$1 million to $2 million The amount Grover Beach estimates a marijuana tax measure could produce

The potential payoff from such a measure is substantial: The city estimates it could bring in between $1 million and $2 million annually.

If it succeeds, that should be enough to recoup the $25,000 cost of placing the measure on the ballot — money the city is taking out of its reserves — though it will still have to go through the arduous and not-guaranteed-to-work process of drafting new land-use ordinances that would allow medical marijuana businesses to operate in the city.

Grover Beach currently bans commercial cultivation and dispensaries. The city directed staff in early July to begin conducting public outreach and workshops to garner public opinion on allowing commercial medical marijuana businesses in the city, but the process is expected to take about six months.

Kaytlyn Leslie: 805-781-7928, @kaytyleslie

Correction: An earlier version of this story misstated the amount the proposed Grover Beach tax would charge per square foot of plant-growing canopy. It would charge 25 per square foot for the first 5,000 square feet and $10 per square foot thereafter.

If you go

The City Council is scheduled to discuss the measure at its meeting at 6:30 p.m. Monday. Council meetings take place in council chambers at 154 S. Eighth St. in Grover Beach.