If the first two months’ revenue is any indication, Woodlake City Hall can expect to be rolling in tax money from the recreational cannabis business from now on.
After counting up the receipts at Valley Pure–the only licensed recreational cannabis storefront between Los Angeles and the Bay Area–the city took in $46,397.14 from its 5% levy. The figure translates into sales of $927,942.80 for the initial 60 days of operations at the city’s first, and so far only, working cannabis business.
The tax revenue likely represents the first trickle of what will soon be a heavy stream of income. At least three other businesses plan to open in Woodlake in the very near future, and several more have been asking questions at city hall.
Could Have Been More
Wes Hardin, the pot shop’s manager, says the sales figure they posted could have been bigger, and he promises it soon will be as business continues to grow.
“That was a low number. It represents just the first two months,” he said. “We’re climbing, definitely trending upwards.”
So far, brags Hardin, the city has earmarked its share of the take for a new police patrol car and police dog, as well as for road repairs.
“The city loves us,” Hardin said. “How could they not?”
‘Happier and More Comfortable’
City Hall is also putting some of the revenue toward new playground equipment for the city’s parks, says Vice Mayor Frances Ortiz, and another portion will go toward funding education.
“The money is going to go for recreation, police officers and the schools,” said Ortiz, who is a veteran of several years service on Woodlake’s school boards, in addition to her several terms on the city council. “It’s going to be (spent on) things that make the people happier and more comfortable.”
Ortiz says some residents of her town were concerned when the council moved to embrace the newly liberated recreational cannabis industry when no other city in Tulare County was willing. However, the fears appear unfounded.
“I think everybody is satisfied in that it’s been calm and respectful, dignified,” said Ortiz. “I don’t know what they expected, but we’ve had no complaints.”
City Hall Satisfied
Jason Waters, Woodlake’s community development director who was instrumental in promoting a cannabis-friendly tax rate of 5%, says there have been no criminal or code violations at Valley Pure since legal weed came to town.
“We haven’t had any issues,” he said. “No calls for service, we haven’t had any complaints about them doing anything they shouldn’t be doing, so we’re happy about that.”
Compared to sales tax revenue from other transactions, cannabis far outstrips their performance in the percentage returned to the city where the sales took place. While everyday sales carry a tax of 8.5% in Woodlake, the city sees only a small portion after the state and county take their cuts.
“We get about 1%,” Waters said. “At the same time we passed our sales tax, we passed an increase in sales tax, so we (now) get 2%.”
In Woodlake, the entire 5% cannabis sales tax goes to city hall, and how it will be spent is entirely at the discretion of the council.
While there’s only Valley Pure open to custom now, that will soon change. Three other businesses have decided Woodlake’s cannabis-friendly attitude makes its remote location a secondary concern. In fact, for two of the businesses the location may be a plus.
One of the three perspective newcomers will offer another storefront for direct sales to cannabis users, while the others will focus on production and cultivation. Woodlake’s cannabis tax for cultivation is based on the square footage devoted to growing; manufacturing will be taxed as a percentage of profits. How that will effect Woodlake’s bottom line is entirely uncertain, at least in terms of how much more it will increase their income.
“Until they start operating, I couldn’t even give you a guess,” said Waters.
Woodlake’s budget for fiscal year 2018-19 totals $12.2 million, of which about $2.7 million makes up the city’s general fund, that money it can spend on any project. The remaining moneys are allocated to funds that must be spent to meet the city’s financial and legal obligations.
If sales at Valley Pure continue at their current level, the store will generate approximately $300,000 annually in sales tax revenue.
The second storefront hoping to open in Woodlake has already been approved, and plans are to operate on Naranjo Avenue west of Valencia Boulevard, where the shop’s owners have agreed to add infrastructure upgrades as part of their remodeling of an abandoned lumber mill, a relic of the county’s lost lumber industry. Yet Waters is still taking a wait-and-see attitude at this early stage.
“They’re going to put in curbs and sidewalks, a nice parking lot, rehabilitate the building,” he said. “I’m not counting my chickens yet.”
But the potential for a renaissance in that tiny foothill town is too alluring to ignore.
“Either way, the city, anytime we can bring in a business that generates jobs, we’re thrilled,” Waters said. “In a small city, that can be difficult sometimes.”
While storefronts only hire a handful of workers, the other two businesses that want to come to town could generate many more, some of which will be skilled positions in manufacturing.
Recently, the city annexed a plot of land on the western edge of town that includes a defunct citrus packing house. The house could soon spring back to life after 20 years of sitting idle, if the council approves a plan by Seven Points Group, a cannabis grower, packer and processor, to turn it into a factory.
“It’s a big building,” said Waters. “They could generate a lot of jobs.”
New Center of Industry
The Seven Points Group plan goes before the council this month, and next month a second proposal by Premium Extracts for a manufacturing plant that will convert cannabis into essential oils will be up for consideration.
“They’re a little bit behind Seven Points. They could be approved as soon as October,” Waters said. “They’re going to take a cannabis product and turn it into something else. They wouldn’t be growing.”
Premium Extracts had planned to open their facility in Hanford, but the welcoming attitude of Woodlake and it’s mid-range tax rate lured them away to the Sierra foothills. The interest in Woodlake could become a deeper trend, perhaps making the town a new center for the fast-growing industry. It would be a welcome change from the slow loss of other ag-related jobs in the area.
“It’s nice to have someone come in,” said Waters. “Those were lost jobs that never came back.”
‘Outsiders and Weird People’
At least one concern voiced by Woodlake’s residents before the pot-friendly tax was approved was the class of people such business would attract. That uncertainty has also proved unfounded, and those who have come to Woodlake are actually providing even more business and tax revenue than their cannabis purchases generate.
“They say they eat, they buy gas here in town,” said Vice Mayor Ortiz. “I’m happy. I think it’s been as a nice project. People were worried about outsiders and weird people. We haven’t had that.”
Who they have drawn to town are people like Fresno residents Gene and Jill, who asked not to have their last name used in print because of Gene’s background as a police officer and private detective. The couple, which spends between $200 and $400 a month on cannabis, has traveled as far as Oakland and Santa Rosa to find high-quality weed to treat Gene’s medical conditions.
“We’d never been here before,” said Jill. “We wanted to take a look.”
They like what they see and they like the quality of the product they purchased at Valley Pure. They’ll likely be back, and when they come they’ll probably visit the convenience store across the street from the pot shop again. Or maybe they’ll have lunch at the coffee shop next door.
Ortiz said the couple is typical of the customers being drawn to town. Cannabis, she said, does not pose a threat in any way. It’s far less destructive, she says, than the consumption of alcohol. She’d like to see her friends and neighbors change the way they self-medicate.
“They’re 100% calm, respectful people. We haven’t had any police problems,” Ortiz said of Valley’s Pure’s clientele. “This has been around for millions of years, and it’s just now it’s legal.”
Cannabis, she said, is a good fit for Woodlake.
“We’re not trying to impose anything evil on anybody,” Ortiz said. “I think the decision we made is a good decision.”