Hanford City Council Votes on Pot, Hotel Taxes

At the February 7 Hanford City Council meeting the members voted to go forward with a transient occupancy tax measure and a medical marijuana facility tax measure.

If approved neither tax will be paid by the residents of Hanford.

The transient tax will be a special election mail-in ballot in August, and the tax on the medical marijuana facility will be on the November 2018 ballot.

Hanford’s current transient, or hotel, tax is 8% and goes into the city’s general fund. The city staff recommended raising the tax to 12%.

The four percent increase would be put into a downtown revitalization fund, which needs revenue to renovate building facades, improve infrastructure, and entice more businesses to move downtown.

Visalia and Tulare’s occupancy tax is 10%.

Hanford City Manager Darrel Pyle suggested the city do a mail ballot in August.

This type of measure would require 66.67% approval from the voters to pass. Council members didn’t see a problem with reaching that threshold because out-of-towners would be paying the tax.

The last Tuesday in August is one of the dates approved by the registrar of voters for conducting this type of special election. Councilmember Justin Mendes suggested coordinating Hanford’s birthday celebration with the August election. During Hanford’s annual celebration the city could host an educational booth on the ballot measure.

The vote was 5-0 in favor.

Tax Considered for Proposed Hanford Medical Marijuana Facility

The second tax discussed would be levied on the proposed medical marijuana facility in Hanford’s Industrial Park. Purple Heart Patient Center has proposed to open a medical marijuana processing facility in the 900,000 square-foot former Pirelli Tire Factory. The facility is projected to employ 1,115 workers at wages starting at $15 per hour. At full capacity, the cultivation center would be Kings County’s largest private employer and is projected to generate $14 million a year in tax revenue.

The Purple Heart facility has not yet been approved by the Hanford City Council.

During last year’s election, Coalinga residents voted in favor of establishing an annual tax on their marijuana cultivation center that operates in a previously empty prison. The measure was overwhelmingly approved 61% to 38%.

Coalinga jumped on the band wagon early and the small, poor Fresno County town is now reaping the benefits. According to Pyle, Coalinga has already received its first tax revenue check from their medical marijuana facility.

Hanford’s proposed medical marijuana tax ballot measure would be similar to Coalinga’s. The measure would require that Purple Heart, or any other medical marijuana facility in the industrial park, pay $25 per square foot of the first 3000 feet and $10 per square foot for the remaining space used for the cultivation of medical marijuana.

The general tax ballot measure would only need a 50% plus one vote to pass. A general tax measure cannot be decided in a special election. A vote on a general tax must take place during a regular election and was proposed to be on the ballot in November 2018.

California will start issuing permits for marijuana facilities in January of 2018 only to those companies that have already acquired a local permit. This would cause Purple Heart a lag time of 11 months before it could start operating in Hanford if the city waits for the outcome of the November election.

The lag time lead to a debate over giving Purple Heart a local permit before the residents vote on the tax measure in November of 2018. Councilmember Sue Sorenson said that if the city council takes a wait and see attitude that the medical marijuana industry could be built out before Hanford gets its act together. Pyle said that it was a guarantee that Purple Heart will look elsewhere if Hanford does not make some sort of commitment by issuing a local permit.

Mendes said that he was willing to take the risk that Purple Heart might look elsewhere. He said that there are not a lot of million square feet facilities along highway 198 between Highway 99 and Highway 5. He said he would vote no on approving a permit before the residents had a chance to vote on the tax measure.

Kings County Sheriff Dave Robinson reported that the feedback he has received from towns with marijuana facilities is that they are notoriously non compliant. The companies are manageable but they are always looking for ways to get around the regulations.

After the discussion the council voted 5-0 to pursue a tax measure but not grant permits until after the November 2018 election.

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