Tax: Council is considering a new tax on marijuana sales. SMDP Photo

City Hall has yet to legalize the sale of recreational marijuana, however they are already thinking about how to tax it.

In a June 14 Council meeting, Councilmembers voted unanimously to have staff research a ballot measure that would allow the City to place a Santa Monica tax on the sale of recreational cannabis.

What they were not unanimous about is whether that tax measure should appear on the November ballot. While some Councilmembers want to move the process forward as quickly as possible, others fear that a measure this election cycle would be rushed and potentially hurt the chances of other revenue raising ballot measures passing. 

In general, City Council supports the idea of legalizing the sale of recreational marijuana, which is already the norm in most other municipalities. In a May 10 meeting, Councilmembers gave staff direction to return with a study session on the process to do so. 

Currently, Santa Monica only allows for the sale of medicinal cannabis under very strict conditions stipulated in the Santa Monica Cannabis Ordinance. These regulations are so onerous that so far no dispensary has opened doors, even though medicinal sales have been legal since 2017. There are two dispensaries currently in the works. 

If Santa Monica were to legalize recreational sales, most of the tax revenue would automatically go to the state. Councilmembers Oscar de la Torre, Phil Brock and Lana Negrete therefore propose preemptively approving a local tax measure so the City would be ready to capture some of the profit immediately following legalization. 

“We are right now in difficult times in terms of our budget and we’re thinking that there will be missed opportunities in terms of how we might be able to take advantage of that tax base that we’re losing now to our neighbor in Los Angeles,” said de la Torre, who supports placing the measure on the November ballot.

Councilmembers Kristin McCowan, Gleam Davis and Sue Himmelrich all agreed that putting such a measure on the November ballot would be too rushed, particularly given that there is not enough time to complete community polling prior to the August 12 deadline to approve measures.

“I would never put anything on the ballot without polling…We all got all the mail about the library, right? Everybody wants libraries open blah, blah and then when we want the [library] parcel tax, it’s not going to pass,” said Mayor Sue Himmelrich, referring to the unfavorable poll results for a potential parcel tax to raise funding to reopen libraries. 

Councilmember Gleam Davis also fears that there is not enough time to perfect the ballot language measure.

“If you put something that’s, pardon the pun, half-baked on the ballot in November and people vote against it, it’s going to be very difficult to bring it back no matter how much you’ve refined it, or thought about it, or amended it,” said Davis. “People say ‘well, I already voted against it, I’m not going to vote for that’.”

The last key worry raised about placing the measure on the November ballot is that it would inadvertently hurt the odds of other tax raising measures passing, even though the recreational weed tax would not take effect until the legalization process is complete.

“We are already talking about putting a transient occupancy tax measure on the ballot. We are likely going to have one or two property transfer tax measures and Santa Monica College has just announced they’re putting a bond measure on the ballot,” said Himmelrich, later adding, “people’s capacity to accept taxation only goes so far.”

De la Torre disagreed that preparing a tax would be time intensive, pointing to the fact that there is boilerplate language available from approved measures in other cities and that City Attorney Douglas Sloan oversaw a similar process while working in the City of Fresno. 

Brock also supports adding the measure in November, saying that otherwise Council will not have the opportunity to do so until the 2024 election. 

“I do believe we have to vote for a tax first, because if we don’t, then the state would get revenue, but the City would get absolutely nothing,” said Brock. “We probably have a million and a half, two million in potential revenue a year to Santa Monica from having retail outlets.”

While Council remained in disagreement over when such a measure should appear on a ballot, they all agreed to have staff research the potential measure.