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Santa Clara Hires Cannabis Consultant

Santa Clara City Council. Photo: Nhat V. Meyer / Mercury News

The Santa Clara City Council voted 6-0, Dominic Caserta absent, on Tuesday, September 26 to hire a consultant to provide advice on what commercial cannabis regulations to adopt, as the city looks to tax the industry via retail dispensaries as early as April 2018. Locations for and the number of cannabis dispensaries to be permitted has not yet been discussed.

The move is the strongest yet by any city in Santa Clara County, except San Jose, where 16 medical cannabis dispensaries have operated legally since 2015. San Jose earns $11 million annually from licensing fees and a 10 percent sales tax on medical cannabis sold by those 16 dispensaries.

The city council gave clear direction on August 22 and again on September 12 that it did not want to ban cannabis dispensaries, but that regulations permitting dispensaries to operate and provide tax revenue to the city are desired. Senior staff were still able to convince the city council to vote for a temporary ban on all commercial cannabis activity, since three months is apparently not enough time to hire a consultant and solicit public input on a cannabis ordinance. Staff was directed to bring a draft ordinance permitting retail dispensaries to be studied by the City Council in February 2018 and adopted by April 15, 2018.

Assistant City Manager Ruth Shikada and City Attorney Brian Doyle insisted that the city couldn’t earn any revenue without (a two-thirds) approval by city voters. “The fees [assessed on retail cannabis businesses] would be only for cost recovery,” said Doyle. “Any actual revenue generation would have would to be a tax that would go to the voters.”

The public argued for permissive regulations.

“This is a whole new industry in term of social acceptance and social understanding,” said resident Kirk Vartan. “We need to take the stigma away from the product and think about how is this going to evolve over time.”

“Look at Washington, Oregon, and Colorado. Look how much tax revenue has come in,” said resident Scott Lane. “We need to get this out of the closet and into a space that’s more respectful.”

“For some reason liquor gets a pass but when it comes to cannabis everyone freaks out.”

Santa Clara city staff intend to hire a consultant by the end of October and solicit public input on the city’s future cannabis ordinance in November and December.