As voters across California prepare to cast their votes in the gubernatorial recall election, Lompoc voters also will be presented with Measure Q2021, a tax measure that would impose a tiered or graduated tax on manufacturers and distributors in the Lompoc cannabis industry.
Currently, cannabis manufacturers pay a flat fee of $15,000 if net income is less than $2 million, and $30,000 if net income is more than $2 million. Should voters pass Measure Q2021, manufacturers and distributors would pay a graduated tax ranging from 0.5 cents per dollar to 2.5 cents per dollar, at half-cent increments, on five levels.
- $10 million and under: 0.5%
- $10 million — $25 million: 1%
- $25 million — $40 million: 1.5%
- $40 million — $55 million: 2%
- $55 million and over: 2.5%
Should Measure Q2021 fail, the current flat fees on manufacturing and distribution would remain in effect. Although the proposed graduated tax on cannabis manufacturing and distribution does not seem to be egregious, it should be noted that giant companies like Raw Garden and Stiiizy, among smaller companies, were attracted to the tiny Lompoc market because of its free market approach and low tax structure, which, in turn, brought hundreds of new local jobs.
Take a moment to consider: In June 2017, during tense budget discussions on the heels of former Lompoc City Manager Patrick Wiemiller mentioning the “B” word — bankruptcy — the council was discussing the possibility of a 2% transient occupancy tax (TOT), which ultimately was not adopted. Two Lompoc hotel owners were present and at the meeting the hoteliers asked that the council not consider a TOT tax as it would have a net negative effect on visitation to the city. They noted that they typically compete with Buellton and Santa Maria for bus companies, which work on wholesale, to bring tourists to the city. They said that they were able to lure the buses because they can undercut the other cities’ prices, sometimes by less than a dollar. If hotel prices in Lompoc were to rise by just $1 or $2, they said, those thousands of visitors would go elsewhere rather than pay the difference.
Why doesn't the council see the parallel?
In my June column, I explained that Lompoc is a bedroom community with many of its residents working out of town. Though the town is not located next to a major freeway, it provides a smaller, qualified workforce than larger communities.
Lompoc is attractive to manufacturers and distributors, among other canna-businesses, because of its current low-tax structure that has stimulated a total of 52 business applications — despite the global pandemic. Such businesses bring more than just tax dollars; they provide critically needed jobs that stimulate our local economy’s financial health.
Just like the hoteliers warning that visitors would pass over Lompoc to save a couple bucks with the level of taxation already levied upon the cannabis industry, operators could choose to move operations to more favorable markets if it becomes economically unfavorable in Lompoc. While the giant companies can absorb a modest tax, some of the smaller manufacturers who have poured their hearts and bank accounts into their businesses may not, especially if they still haven't had the opportunity to open their doors.
I advocated and supported the City Council's decision authorizing voters to directly vote on modifying taxes, but remain reserved on Measure Q2021’s claims to improve policing, parks, etc., especially after previous tax measures that advocated similar promises were used to give raises, whether deserved or not.
Regardless if voters approve or deny Measure Q2021, the cannabis industry will continue to be an economic source for jobs and revenue, and citizens will be afforded the opportunity to directly influence its local impact.
To that I say, more flower to the people!
Under the proposed ordinance, the city could have allowed up to four special cannabis-related events where participants 21 years of age or older could have sold and consumed cannabis. The event “would very likely take place outdoors and would likely take the form of a festival or expo."
Seaweed Dispensary and Lounge in July 2018 was awarded Lompoc’s first commercial cannabis license and became the sixth dispensary to open for business in December 2019.
Lompoc City Council members unanimously declared a state of fiscal emergency on June 1. The move allowed the city to call an Aug. 31 mail-in-o…