Woodlake passes last permits for pot businesses

Woodlake approved the final permits for four cannabis-related businesses with public hearings, and subsequent city council approvals for conditional use permits at its January 22 council meeting. Valley Pure, Green Bean Pharm, Green Smart and Top Crop are all moving toward opening business within the city, although with one question remaining – they don’t know exactly what the city tax will be.

Last November, Woodlake voters passed Measure S, a commercial cannabis business tax in the city on commercial cannabis businesses up to $25 per square foot (annually adjusted by CPI) or 10% of gross receipts. However, council is still working out the rates for each type of cannabis-related business.

In a presentation during the January 22 council meeting, staff provided information on what other cities around the state are charging as city business taxes. The statewide cannabis tax is 15%; the Woodlake sales tax is 8.75%.

Some cities, such as San Jacinto in Riverside County, are high, charging 15% on retail sales. More locally, Coalinga is charging 10%, and some other larger cities throughout the state are coming in less with Stockton charging 5%, Los Angeles 4% and Sacramento 4%.

“It’s all over the place,” said Jason Waters, Woodlake’s community services director.

Woodlake hopes to come up somewhere in the middle, Waters said in an interview following the council meeting.

“We’re going to try to be competitive and won’t be on the extreme sides,” he said.

If the tax is too high, either companies won’t open in the city or they won’t be successful, but the city wants to earn some tax dollars, as well.

Valley Pure at 132 N. Valencia Blvd., and Green Bean Pharm at 515 W. Naranjo Blvd., are proposed retail businesses. Woodlake has limited the number of cannabis retailers to two, within the city. Both are currently working on getting their locations ready for business, without knowing just what the city tax rate is, they will be paying.

Top Crop at 457 S. Acacia, is looking to cultivate and manufacture cannabis products in Woodlake; Green Smart at 1049 W. Ropes, is also wanting to cultivate and manufacture, as well as distribute. The definition of a distributor is to grow cannabis and send/sell that cannabis to a manufacturer, retailer, or distributor. It does not include retail sales. Each location has proper zoning for its use.

Some cities, such as Sacramento, has a 4% tax on all types of cannabis business. Woodlake will most likely set different taxation on differing types of business.

“We’re definitely going to recommend to separate them,” Waters said. “They operate differently.”

For example, it makes sense for tax on cultivation to be determined by square footage, he said, but not a testing facility, nor a retail store. Some cities do not charge a tax on testing facilities – to date, no one has applied for that type of business in Woodlake.

To date, Woodlake is the only city in Tulare & Kings Counties to allow retail sales of cannabis. The City of Farmersville is allowing cultivation and manufacturing at $12/sq ft or 8.75% (which happens to be the amount of that city’s sales tax) taxation, according to Woodlake’s study.

While all licensing is now complete, each facility will need to meet building and code standards prior to opening. The city staff is looking to bring its recommendations to council in a few weeks, at which time council should vote on its city taxation for cannabis businesses. Each facility will be subject to an annual renewal.

“It’s an ever-evolving market,” said City Manager Ramon Lara. “The market may look very different in five years.”

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