On June 1, the Lompoc City Council decided on a rare 5-0 vote to allow voters to decide whether or not to tax manufacturers of cannabis products in Lompoc.
But first a brief history lesson. The council first considered this idea on March 20, 2018; here is how the discussion went according to the minutes of the meeting: “Councilmember [Jenelle] Osborne moved to direct staff to prepare a tax measure for the upcoming November 2018 general election ballot that would implement a 6 percent tax on retail businesses, a 2 percent tax on manufacturing businesses, a 1 percent tax on cultivation, no tax for testing businesses, and an aggregate total of 6 percent on microbusinesses. The motion was seconded by Mayor [Bob] Lingl.
“Councilmember [Jim] Mosby moved a substitute motion to direct staff not to move forward with any tax regarding commercial cannabis activities within the city. The motion was seconded by Councilmember [Dirk] Starbuck. With a vote of 3-2 (Councilmember Osborne and Mayor Lingl voted no), the council approved to place the substitution motion as the first motion.”
Well, times have changed and so has the makeup of the council. Jim Mosby is no longer a member of the City Council. Furthermore, the current members of the City Council are united in their belief that the citizens of Lompoc should be allowed to vote on taxation matters that ultimately support the services they receive from the city.
Currently there is only one large cannabis manufacturer in the city, one of the top five producers based on gross revenue in the state. During a Planning Commission hearing on April 14, 2021, the company requested a conditional use permit to install 200 refrigerated storage containers on the northwest side of town.
In a response given to a commissioner’s question, a company spokesperson said the current manufacturer “employs 100 semi-skilled and 50 professional jobs at this time, and when the new campus is built, it will provide an additional 200 to 300 semi-skilled and 100 professional jobs.” And the spokesperson said that “the ultimate goal is to build a new, approximately 400,000-square-foot campus for our administrative, operations, and research and development teams.”
In addition to this operation, another company, also among the top five producers, plans to set up shop in town too.
The city currently taxes retail cannabis sales, and the only change would be to allow them to collect the tax based on the product cost, not the total after other taxes were collected. There were two new taxing alternatives on the table; the one chosen was a modified version of one of those proposals. The new tax would apply to manufacturing and be a graduated tax on a sliding scale based on gross income.
In a previous hearing on this matter, the staff provided a comparison of manufacturing taxes in several other cities in the region, and the modest tax structure being proposed would be lower than all other cities in the northern half of the state.
When the industry recovers those costs, it would likely be spread over their entire product line and distribution network; so the people of Lompoc would be somewhat supported by communities all over the state. Now that sounds like a good deal to me; our city needs revenue, and why not let other people in faraway places send it to us?
Councilmember Gilda Cordova was very vocal during the June 1 hearing and pointed out that “if the previous council had done their job” there would be no need to have the current discussion.
One dust-up occurred concerning a finding of fact in the resolution that was finally approved. The finding stated in part, “Whereas, the city is experiencing an existing and immediate funding crisis.” Councilmember Starbuck said, “the fiscal emergency part is going to have to be convincing” and “if you declare a fiscal emergency, it sends out a notice that the ship is sinking” to prospective investors.
Councilmember Cordova then said, “I do declare this a fiscal emergency because of the fact that we need to get this situated so that we can get revenue coming into our general fund so that we can get some of the things that intended to be funded.” By this she is clearly referring to the increase in revenue needed so city leaders can start addressing many of the longstanding infrastructure issues that have been plaguing the city.
During the discussion, Councilmember Starbuck, who was initially opposed to the idea, also said, “I wanted to come up with something here that wouldn’t fleece the industry,” adding that he would compromise to accept a proposed graduated tax rate.
Starbuck also expressed concern about adding a tax after businesses have applied for permits, submitted deposits to the city, and made investments toward opening in Lompoc.
“The collection of it—I mean, just out of pure respect for people—you don’t come in and say OK, three months from now we’re going to impose this on you and four months we’re going to tax you on it. A little give and take here,” he said.
His concern was reasonable, so the rest of the council agreed. Mayor Osborne said after the unanimous votes, “Thank you all for the respectful discussion and the negotiation and the compromise. I know this is a difficult topic. I think that it is what’s in the best interest for many in the community.”
All but one of the 30-plus public comments supported the right of voters to determine the outcome of this proposal. The lone objection was by former Mayor John Linn.
Although this discussion lasted for more than two hours, it’s the way government should function to create the best outcome. Now we’ll have to wait and see if the community supports the new tax measure on Aug. 31 of this year during a special election.
Ron Fink writes to the Sun from Lompoc. Send your thoughts, comments, and opinionated letters to letters@santamariasun.com.
This article appears in Jun 17-24, 2021.