Email from Dave Hodges to the San Jose City Council:

Hello Mr Mayor and Honorable Council Members,

I have a few major concerns with the Marijuana Tax Initiative you will be discussing at the August 3rd Council meeting. Attached to this email is a memo suggesting the minimum changes needed in order for the Marijuana Tax Initiative to gain the support of the medical cannabis community. This topic should have been discussed more in-depth at any of the community out reach meetings, but it was not. As is, I feel it does not reflect any input from the San Jose medical cannabis community, and will only serve to make a bigger mess of this whole situation.

Among other problems with the San Jose Marijuana Tax Initiative, I feel the proposed rate is extremely high(no pun intended). 10%, in addition to the 9.25% tax we already pay, would be taxing medication at 19.25%, this would place an undue burden upon medical patients. Many of which who are either low income or live on a fixed income, due to age or medical reasons.

Some of my major concerns with the Tax Initiative as has been presented are:

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No separation between Medical Cannabis and “Adult Use” Cannabis. Medication should not be taxable, but if we must pay a tax, it should be less for medical users then the “Adult Use” users from Prop19.

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Section 4.66.510 Rules and Regulations- Allows “the Director” (of the Finance Department or other director designated by the City Manager) to “promulgate”/change the “rules and regulations”, “from time to time” WITHOUT vote of the council.

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Section 4.66.550 Deficiency Determinations- Is completely unnecessary and potentially grants the Director more powers then the IRS.

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Section 4.66.600 Violation Deemed Misdemeanor – Penalty- Creates a new class of criminals out of existing operators, growers, vendors, and potentially even patient caregivers. Which is punishable by a fine of $500 or “six (6) months, or by BOTH such fine and imprisonment.”

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Section 4.66.530 Audit and Examination of Records and Equipment- Allows “the Director” and the Chief of Police to violate HIPPA by investigating “all equipment, of any person engaged in marijuana business in the City”

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Please review my suggestions, and consider revising the Tax Initiative before it is placed on the November ballot.

Thank you for your time and dedication to the City of San Jose.

Best Regards,
Dave Hodges
Founder
SJCBC LLC
SanJoseCannabis.com

P.S: If you have 3 minutes of time, please watch the YouTube video titled “The Flower”; without any words it can explain exactly where we are with this issue in our society.

Attachments:

MEMO:
Cannabis Tax Suggestions to City Council 7-30-10.pdf

PAGES FROM THE TAX:
Suggested-Modified-Pages-of-the-SJ-Marijuana-Tax.pdf

Today at the San Jose Rules Committee, the committee moved forward with the Marijuana Business Tax. It will now OFFICIALLY be on the Aug 3rd City Council Agenda.

At today’s meeting we presented a memorandum for public record highlighting the problems with the current suggested legislation.

Memo From Dave Hodges: Cannabis Tax Suggestions for SJ Council
- Cannabis Tax Suggestions for SJ Council – Just Changes

Some of the most concerning verbiage:

4.66.510 Rules and Regulations

For purposes of apportionment as may be required by law and for purposes of administration and enforcement of this Chapter generally, the Director, with the concurrence of the City Attorney, may from time to time promulgate administrative rules and regulations.

4.66.550 Deficiency Determinations

If the Director is not satisfied that any statement filed as required under the provisions of this Chapter is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Sections 4.66.560 through 4.66.580.

4.66.600 Violation Deemed Misdemeanor – Penalty

Any person violating any of the provisions of this Chapter or any regulation or rule passed in accordance herewith, or knowingly or intentionally misrepresenting to any officer or employee of the City any material fact in procuring the business tax certificate provided for in Chapter 4.76 shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punishable by a fine of not more than five hundred dollars ($500) or by imprisonment for a period of not more than six (6) months, or by both such fine and imprisonment.

DAVE’S RECOMMENDATIONS:

With regards to proposed Cannabis gross receipts tax.

We recommend the proposed tax rate on Medical Cannabis Retail businesses (dispensaries) be set at a maximum rate of 3%, and that a tax rate on Adult Use Cannabis businesses to be set separately at up to 5%. In addition, we recommend the following modifications to the current proposal:

1. MODIFY Section 4.66.250 “Amount of Businesses Tax Owed”
   • ADD the verbiage “up to”
   • CHANGE the verbiage “ten percent 10%” to “three percent (3%) of gross receipts”
2. MODIFY Section 4.66.300 “Payment – Penalty for Delinquency” ITEM “C”
   • ADD the verbiage “, or from the first operative date of this Chapter”
3. REMOVE COMPLETELY Section 4.66.510 Rules and Regulations
4. MODIFY Section 4.66.530 “Audit and Examination of Records and Equipment”
   • Remove the verbiage “and, where necessary, all equipment, of any person engaged in marijuana business in the City, for the purpose of ascertaining the amount of business tax, if any, required to be paid by the provisions hereof, and for the purpose of verifying any statements or any item thereof when filed by any person pursuant to the provisions of this Chapter.:”
5. REMOVE COMPLETELY Section 4.66.550 “Deficiency Determinations”
6. REMOVE COMPLETELY Section 4.66.600 “Violation Deemed Misdemeanor – Penalty”
7. MODIFY Section 4.66.630 “Effect of State and Federal Reference/Authorization”
   • REMOVE the verbiage “and federal” & “or federal”

Read the full legislation:

• Original City of SJ: San Jose Marijuana Tax for November Ballet

• with Dave’s Changes: San Jose Marijuana Tax for November Ballet

Q: What’s next for San Jose Medical Cannabis?

A: The city wants to put in place a 10% TAX in addition to the states 9.25%.. Taxing medication in SJ at 19.25%!

The city surveyed less then 800 likely voters of which over 50% were Caucasian, and 80% lived in single family homes (not apartments or multi-tenant houses). With this data, they have come to the conclusion that a 10% sales tax for medical cannabis is appropriate. The survey they used is confusing and misleading. This is simply another attempt to chase medical cannabis out of town. A 19.25% tax would drive medical patients back to the streets, where no tax is changed, or out of town for their medication.

Review the potential ballot measures yourself:

SURVEY OF POTENTIAL BALLOT MEASURES:

http://www.sanjoseca.gov/clerk/Agenda/20100803/20100803_0303a.pdf

MEMO: MARIJUANA BUSINESS TAX BALLOT MEASURE:

http://www.sanjoseca.gov/clerk/Agenda/20100803/20100803_0303c.pdf

RESOLUTION OF THE CITY COUNCIL: A BALLOT MEASURE PROPOSAL TO TAX MARIJUANA:

http://www.sanjoseca.gov/clerk/Agenda/20100803/20100803_0303cres.pdf

CITY COUNCIL MEETING, AUGUST 3, 2010 Agenda:

http://www.sanjoseca.gov/clerk/Agenda/20100803/20100803a.pdf

The Marijuana Business Tax Measure is item 3.3.c of the Agenda

MEDICAL MARIJUANA ORDINANCES COMMUNITY MEETING

July 20, 2010, 6:00 p.m. – 8:00 p.m.
Roosevelt Community Center

FINAL AGENDA

1. Opening Remarks (6:00 p.m.)

2. Review March 30 Council Referral and June 22 Council Direction (6:05 p.m.)

3. Small Group Discussion (6:20 p.m.)

   During the small group discussion, attendees will have the opportunity to self-select a topic (see list below) to provide input that will help staff further develop the Ordinances for City Council consideration. Attendees will also have the opportunity to share any additional thoughts for City consideration.

   • Registration Process & Requirements: 10 Collectives, Priority Order, 1 Year Registration Term, Registration Fee, etc.
   • Operating Requirements: Safety & Security, Day & Hours of Operation, Owner/Management Requirements, Packaging, Maintenance of Records, etc.
   • Taxing Marijuana Businesses: Ballot Measure, Tax Rate Policy Options, etc.
   • Land Use Policy: Sensitive Uses & Distance Requirements, Cultivation, Public Noticing, etc.

4. Large Group Discussion (7:10 p.m.)

   Each group will share themes that emerged from their small group discussion.

5. Next Steps / Adjournment (7:50 p.m.)

   August 3, 2010 City Council Meeting
   November 18 or December 13, 2010 City Council Study Session on Medical Marijuana (Tentative)

This meeting will be facilitated by Dr. Shawn Spano. Dr. Spano specializes in designing and facilitating public
engagement forums and meetings.

Celebrate 1 year of Medical Cannabis Clubs in San Jose!

Discounts and freebies all day

Member party TODAY, July 17th!

• BBQ from 12:30-3:30pm

• Hang out and medicate on site all day 11am-7pm!

• Raffle at 4pm for gifts including: pipes, vaporizers, medication, and more!

All day, get 1 raffle ticket for every $20 you spend on medication!

MEDICAL MARIJUANA ORDINANCES COMMUNITY MEETING

July 20, 2010, 6:00 p.m. – 8:00 p.m.
Roosevelt Community Center

AGENDA

1. Opening Remarks (6:00 p.m.)

2. Review Council Referral & Key Features of the Ordinances (6:05 p.m.)

3. Small Group Discussion (6:20 p.m.)

   During the small group discussion, attendees will have the opportunity to self-select a topic (see list below) to provide input that will help staff further develop the Ordinances for City Council consideration. Attendees will also have the opportunity to share any additional thoughts for City consideration.

   • Registration Process & Requirements: 10 Collectives, Priority Order, 1 Year Registration Term, Registration Fee, etc.
   • Operating Requirements: Safety & Security, Day & Hours of Operation, Owner/Management.
   • Taxing Marijuana Businesses: Ballot Measure, Revenue, Tax Rate, etc.
   • Land Use Policy: Sensitive Uses & Distance Requirements, Cultivation, Public Noticing, etc.

4. Large Group Discussion (7:10 p.m.)

   Each group will share themes that emerged from their small group discussion.

5. Next Steps / Adjournment (7:45 p.m.)

   • August 3, 2010 City Council Meeting

This meeting will be facilitated by Dr. Shawn Spano. Dr. Spano specializes in designing and facilitating public engagement forums and meetings.

Celebrate 1 year of Medical Cannabis Clubs in San Jose!

Discounts and freebies all day Friday July 16th & Saturday 17th

Member party July 17th! Hang out and medicate on site all day 11am-7pm!

BBQ from 12:30-3:30pm

Raffle at 4pm for gifts including: pipes, vaporizers, medication, and more! Starting TODAY, get 1 raffle ticket for ever $20 you spend on medication!

We have had several calls asking if we are open today.. The answer:

YES we are! We will be open until 8pm today

Mention this post and get 10% off!!

What’s next for Medical Cannabis in San Jose?

The City of San Jose has scheduled a Medical Cannabis community outreach meeting for 7/20 at the Roosevelt Community Center in San Jose.

At this meeting, staff plans to present key features of the proposed regular ordinances.

Everyone interested in what’s happening to medical cannabis in SJ should attend.

When: July 20, 2010, (6 p.m.-8 p.m.)
Where: 901 East Santa Clara Street, San Jose, CA

Hope to see you there!

In my last post “What really just happened to Cannabis in San Jose..“,
I screamed like Chicken Little, “the sky is falling!”.

Thankfully, we can all say.. I was wrong!

I just got a email with real clarification from the agenda staff.

At 10am today, they also posted the synopsis of the 6/22 meeting:
http://www.sanjoseca.gov/clerk/Agenda/20100622/20100622syn.pdf

They did not pass the urgency land use.

They did approve Mayor Reed and Council Member Oliverios’ memo.

posted on 6/18:  http://www.sanjoseca.gov/clerk/Agenda/20100622/20100622_0310att.pdf

> The memorandum from Mayor Reed and Council Member Oliverio, dated June 18, 2010 was approved:
> (1) With regard to collectives that are currently located in San José, direction is given to focus enforcement on the closure of any collective that is within 500 feet from sensitive uses in the staff report and/or any collective located outside the CG Commercial General Zoning District. Staff was further directed to return to Council with:.

Sensitive uses are: a residential use, school, child day care center, church that includes a school or child day care use, community or recreation center, park, trail, library, substance abuse rehabilitation center or another Medical Marijuana Collective

The number of locations where CG Zoning is not within 500 feet of a sensitive uses is pretty small. The fact is, code enforcement has something to enforce now… Should be fun to see what their next move will be.

.. it looks like the sky isn’t falling just yet..

Sorry for all the confusion.

Best Regards,
Dave Hodges