By Helen L. Horvath, PsyD
November 28, 2020 (Lemon Grove) – One of the hottest topics on the November 17th Lemon Grove City Council meeting held via Zoom was how to develop revenue streams to decrease Lemon Grove’s budget deficit. This need to increase the City’s financial strength has led to many hard choices and a community desire to find innovative methods to raise tax revenues.
One path to fiscal solvency may be found in the new ability to tax recreational marijuana businesses, under Measure J, which was approved by voters in the November 2020 election by an overwhelming 72% to 28%. Measure J permits taxation of recreational marijuana to be added to the City’s municipal code.
That’s a hot button issue in Lemon Grove. Some residents look at authorizing use of recreational marijuana as a moral issue, while others view the matter as simply a zoning change to boost the City’s bottom line. The zoning change permits the municipal code to develop permit fees for recreational marijuana sales. Whatever side of the fence that community members fall upon, the fact remains that sales of recreational marijuana has potential to further improve Lemon Groves financial situation for the entire community.
City staff has estimated that taxing recreational cannabis under Measure J could increase revenues to the general fund between $560,000 to $1,120,000 per year, depending upon the number of permits sold within City limits.
From voters’ perspective, the projected passage of Measure J in the November 2020 election sends a clear message that recreational marijuana sales should take place in the City. Lemon Grove Councilmember Jones stated his “support for a zoning change to permit…marijuana sales in the City.” He added, “There is some confusion in the community between the actual use of recreational marijuana and the zoning requirements in the City…If a building is not legally permitted for sale of marijuana; then the building cannot be used to sell marijuana.” He noted, “Attitudes have changed” and said his duty is to uphold the will of the people who voted for Measure J. Jones stated that he supports the zoning change to permit co-location of medical and recreational marijuana businesses.
Measure J allows retail recreational marijuana business permit taxes to be provided to the City’s general fund quarterly. The business permit tax would infuse needed operational revenues through taxation of recreational marijuana businesses. The revenues would be 8% of gross business receipts for non-medical marijuana sales and 4% for other cannabis businesses, according to the City staff at the Council meeting. For currently approved medical marijuana dispensaries, Measure J has removed the per patient fee that was previously part of the conditional use permit process. The use of gross receipts by business category will become the standard method of taxation within the City for approved marijuana dispensaries.
Not all residents are on board with this attempt to raise revenues for the City. In addition, there has been no discussion to date as to the cost of implementation against the cost of program management once implemented. According to the City Manager, Lydia Romero, the proposed ordinance change would require tax collection quarterly. Romero also stated that once more than two dispensaries are placed in Lemon Grove, the City will hire a firm to oversee tax collect.
Councilmember Yadira Altamirano acknowledged that some residents oppose approval of recreational marijuana. But she noted, “There are many illegal dispensaries with concern over the quality of the products sold and the danger to the consumer” due to quality problems tied to unregulated marijuana. She went on to discuss the physical and business security needs within the industry to ensure that employees and customers are safe. Altamirano clarified, “The purpose of the change to municipal code is to permit the sale of recreational marijuana. not the use or consumption” which is already allowed under state law. She encouraged the approval of a City ordinance that requires co-location of recreational and medical marijuana dispensaries.
Residents, during public comments, spoke about the impact of marijuana usage upon memory, cognition, and mental health. Herbert Gordon, Hispanic youth leader, cited key research by the RAND Corporation. The scientific research based in California shows that the availability and proximity of dispensaries to youth increase the likelihood of marijuana usage, due to easier access. The study also found that the youth became desensitized to potential harmful effects of marijuana physically and mentally over time. Like cigarettes, marijuana usage can become psychologically addictive based upon usage patterns.
During the public discussion, the corporate representatives of Lemon Grove marijuana businesses presented their client statements to the City Council from attorneys Jessica McElfresh and Gina Austin.
McElfresh stated that her clients agreed with the modification to Municipal code. Her clients have a conditional use permit (CUP) at 6850 Federal Blvd and are nearing completion of construction of their marijuana business. She discussed support of a streamlined process for those businesses which desire to sell recreational marijuana and already have an approved conditional use permit to sell medical marijuana. McElfresh encouraged the City to permit recreational adult marijuana sales in Lemon Grove to increase potential City revenues. Her recommendation was to permit current CUP permit holders for medical marijuana sales to be expanded to recreational marijuana sales. Her rationale was that the CUP permit holders have already completed the process to obtain certifications and permits. Current CUP permit holders already have a strict requirement tied to medical marijuana sales that can be adapted to recreational marijuana sales. McElfresh recommended the adaption or modification of the medical marijuana CUP permit holder process to the Lemon Grove recreational permit requirements.
Gina Austin, Austin Law Group, provided public comment on behalf of the firm’s client, KIM Investments, LLC, a homeopathic care firm tied to recreational marijuana. KIM Investments, LLC is currently working through the medical marijuana CUP permit process for 3515-3521 Harris Street as a medical marijuana dispensary. KIM Investments, Inc. stated clear support for the modification of the municipal code to include recreational marijuana and a streamlined approach to permitting co-location of medical and recreational marijuana under a single permitting process without amendment to the currently approved medical marijuana CUP permit process. Utilizing this method of co-location has been successful in La Mesa and other programs. KIM Investments, Inc. provided the City Council current codified documentation of the City of La Mesa.
After hearing the concerns of the residents and representatives for cannabis businesses, Mayor Racquel Vasquez reiterated the background of the current Measure J that is law. She stated that marijuana is legal in the City.
“Lemon Grove as of November 17, 2020 has not received tax revenue from sale of medical marijuana as the City is not permitted to tax medication,” according to Mayor Vasquez. Mayor Vasquez went on to state that “the City does not have a say in the debate surrounding the legality of marijuana and sales…there are currently six CUP firms awaiting approval (of medical marijuana permits).”
The Mayor Pro Tem reiterated that the current discussion is for informational purposes and discussion only. Mayor Vasquez went on to state that through this discussion and community input, Lemon Grove will begin to determine the ordinance content and structure that will be completed in the future.
Councilmember Jones requested information with recommendations to examine La Mesa’s methodology for cultivation and processing of marijuana. Noah Alvey, Lemon Grove Community Development Manager, reiterated that cultivating and processing of marijuana is something that can be discussed in the future at the pleasure of the City Council in the development of the Municipal code.
Councilmember David Arambula agreed that “allowing rezoning for recreational sales is the will of the voters…We will do everything to allow sales and do business,” adding, “It is a revenue stream sorely needed.” He made clear that he is in support of the rezoning to allow recreational sales of marijuana.
Mayor Pro Tem Jennifer Mendoza discussed the impact of Measure B and the requirements to have dispensaries 1,000 feet apart, away from schools, and other requirements. She stated, “Lemon Grove needs revenue. The people spoke and stated that they did not want to pay for an increased sales tax,” she said of a measure previously defeated by voters, but added, “The people spoke” in support of Measure J. Mendoza agreed with Arambula that “We need to leverage that as much as possible. The City needs income.”
Mayor Vasquez stated, “We are here to give direction to staff…regarding changes to our ordinance. She wanted to add to the list “the ability to do things like hydroponics for grows along with research and development” adding that she “sees an opportunity here to…be on the cutting edge of research and development.” The Mayor asked, “What does this look like?” She went on to discuss industry operations and development of innovative medical treatments that can become part of the Lemon Grove business community.
According to City Manager Romero, all recreational marijuana dispensaries will be subject to the same quarterly tax. Romero stated that the “tax rates will be determined in December 2020 as the tax is scheduled to begin on January 1, 2021.”
Romero said that the program and municipal code modification are not complete at this point. The City staff will review the inputs and create a draft after another discussion with the City Council prior to finalizing the draft ordinance. The draft will contain a clear action plan that will be open for public comment in February or March 2021.
The final decision will be made by the City Council, which will include two new members by then. Councilmember Altimirano is stepping down and Councilmember Arambula lost his reelection bid. They will be replaced by former Councilmember George Gastil and planning commissioner Liana Lebaron, winners of the November election. Regardless of their views on the issue, there appears to be a majority with the Mayor and the two incumbent Councilmembers voicing support for recreational marijuana taxation.
The question of recreational marijuana usage is an individual and personal choice issue no matter what side you are on in this issue, though there are valid public health concerns. However, people are not forced to purchase and smoke marijuana or any other mind altering drug or alcohol. For the business community, selling marijuana is a business decision, nothing personal – business is business.
For the City of Lemon Grove, if the City leadership does not want Lemon Grove to go up in smoke, elected officials may need to take a deep breath and decide if it’s high time to pin hopes on this potential new source of tax revenues to improve the City’s financial solvency issues.
Dr. Helen Horvath is a published author, psychologist, and organizational development consultant. She has covered impacts of the COVID-19 pandemic on Native Americans, veterans and military members locally for East County Magazine. As a speaker, she has been invited to speak at the American Psychological Association Annual Conference, Society of Industrial and Organizational Psychology, and other key professional organizations. Dr. Horvath is a published author on a variety of psychology and business related topics. She is a former marriage and family therapist and published a relationship book entitled “Put a Period to IT: When Divorce is the Option."
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