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Smart Voter
Santa Cruz County, CA November 4, 2014 Election
Measure K
Cannabis Business Tax
Unincorporated Area

Majority Approval Required

Pass: 36,417 / 77.23% Yes votes ...... 10,734 / 22.77% No votes

See Also: Index of all Measures

Results as of November 5 12:22am, 100.00%% of Precincts Reporting (163/163)
Information shown below: Fiscal Impact | Impartial Analysis | Arguments | Full Text

To protect the quality of life in Santa Cruz County and to fund essential county services such as police, fire, emergency response, health services, youth and senior programs, job creation, housing, environmental protection, and animal shelter programs; shall an ordinance be adopted to impose a tax of no more than 10% (7% when enacted) on gross receipts of cannabis (medical marijuana) businesses in the unincorporated county, subject to audits, with all funds staying local?

Fiscal Impact from County Auditor-Controller:
Measure K would authorize the County of Santa Cruz to add Chapter 4.06 to the County Code, imposing a business tax of no more than 10% on the gross receipts of cannabis (medical marijuana) businesses in the unincorporated areas of Santa Cruz County. The rate would be set at 7% at the time of enactment. The cannabis business tax revenue would be used solely for County general governmental purposes.

Fiscal Effect

A cannabis business tax at the proposed rate of 7% of gross receipts is estimated to generate approximately $900,000 annually. The cannabis business is required to file a statement of gross receipts, and pay the business tax on a monthly basis to the Office of the County Auditor-Controller/Treasurer-Tax Collector. A penalty plus interest will be imposed if the tax is not paid timely.

Use of the Funds

All revenues from this business tax will be deposited into the County's General Fund, and spent on essential general governmental services currently supplied by the County such as sheriff, fire, emergency response, health services, parks, youth and senior programs, animal shelter programs, economic development, affordable housing, and other essential county services.


The Auditor-Controller/Treasurer-Tax Collector is the tax administrator, and has the authority to examine the books and records of the cannabis businesses to verify the accuracy of the statement of gross receipts that was filed and the business tax computed thereon. The Auditor-Controller/Treasurer-Tax Collector also has the authority to issue an assessment to a cannabis business for the estimated amount of tax owed if a statement is not filed and a tax is not paid by the business.

County of Santa Cruz

Impartial Analysis from County Counsel
If this measure is approved by a majority of those voting on it, an ordinance will be added to the Santa Cruz County Code authorizing the County of Santa Cruz ("County") to impose a tax on the gross receipts of cannabis (marijuana) businesses operating within the unincorporated area of the County. The tax and the reporting requirements imposed by the ordinance apply to the covered businesses, not to persons who purchase or acquire cannabis from those businesses.

The purpose of the tax is to raise revenue for general governmental purposes, not for regulatory purposes.

If enacted, the cannabis businesses are required to submit to the County Auditor-Controller-Treasurer-Tax Collector monthly statements of their gross receipts, and pay a resulting tax.

Definitions of "cannabis business" and "gross receipts" are set out in the ordinance, the full text of which is printed elsewhere in the ballot pamphlet.

The rate of the tax at effective date of the ordinance would be seven percent (7%) of gross receipts, and it authorizes the Board of Supervisors to set a maximum tax rate up to ten percent (10%) of gross receipts.

Payment of the cannabis business tax would not authorize the conduct of any illegal or unlawful business.

All revenues from this tax will be deposited into the County's general fund and may be used for County governmental services including but not limited to police, fire, emergency response, street maintenance and pothole repair, health services, parks, libraries, youth and senior programs, animal programs, economic development and job creation, and affordable housing.

The County Auditor-Controller-Treasurer-Tax Collector would determine whether the penalties specified by the ordinance for delinquent tax should be imposed, and whether exemptions apply or refunds are owing. Audits may be conducted to determine whether additional tax is owed. Aside from monetary penalties for failure to pay the tax on time, the ordinance declares that violation of its provisions constitutes a misdemeanor.

This tax measure is placed on the ballot by resolution of the County Board of Supervisors.

A "yes" vote is to approve imposition of the cannabis business tax.
A "no" vote is against imposition of the cannabis business tax.

By Jane M. Scott, Assistant County Counsel

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Arguments For Measure K Arguments Against Measure K

Santa Cruz County voters have overwhelmingly supported State and local laws for the compassionate and safe use of medicinal cannabis (marijuana) by physician's recommendation for over 20 years. Residents have strongly supported the need to ensure safe access to medical cannabis for people in need.

As a result, Santa Cruz County worked successfully with neighborhood groups and local industry representatives to create laws allowing cannabis to be responsibly cultivated, distributed, delivered, dispensed, sold, or given away without creating a public nuisance.

These laws respect the needs of medical patients, and their caregivers, as well as legitimate medical cannabis businesses. They also protect our neighborhoods and land from illegitimate operators who damage our forests, divert our streams, and act without respect for our community.

However, the County needs additional revenues to ensure that environmental protection, neighborhood integrity, and public safety are maintained.

The Cannabis Business Tax will provide new money for county services. It will be used for many general purposes, such as:

  • public health and safety,
  • fire services,
  • environmental protection,
  • animal shelter and community programs, and
  • financial accountability.

All revenue collected will stay local, to protect and maintain our neighborhoods.

Voting Yes will not disadvantage low income persons, as there are resources for income restricted patients to receive low or no cost medicine.

Measure K creates a business tax only for cannabis businesses, not all businesses.

Voting Yes will not establish any new cannabis businesses, as the existing businesses are already allowed under State law and our local ordinance.

Measure K is supported unanimously by the Board of Supervisors and will help expand and maintain essential services for county residents.

Join us in voting YES ON MEASURE K.

s/ Bruce McPherson
Santa Cruz County 5th District Supervisor
s/ Fred Keeley
President, Sempervirens Fund
s/ Betsy McCarty
Chief of Public Health, Santa Cruz County (Retired)
s/ Ben Rice*
Attorney for Association for Standardized Cannabis
s/ Karen Delaney
Community Volunteer

  • Signing on behalf of the organization listed below the name.

Rebuttal to Arguments For
The Proponents Argument is deceptive, arguing for stigmatizing the compassionate use of "medical" marijuana, using the theme of criminality, to justify their overly regressive tax on its use. My lawsuit isn't just against their new tax, but against the existing 8.25% tax that will increase to 18.25% if the voters approve Measure K. If approved only "medical cannabis" patients are subjected to this clearly discriminatory tax.

Remember the City of Bell where the City leaders defrauded taxpayers and more recently the King City Police Department. Criminality is drawn by the darkness in the government that proceeds before the criminal element's arrival. Voters shouldn't be deceived this isn't the gateway to legalization of recreational marijuana use that I support and that should be taxed too, but at the same sales tax rate as everything else you buy. My lawsuit also seeks that poor people and Medi-Cal patients should get their medical marijuana free, and people who can afford it should be charged a co-pay like any other medicine you buy.

I asked the voters to Vote No on Measure K, not for me but the "Grateful Dead". "A traveler enters a village and finds the villagers desecrating, or refusing to bury the body of a dead man because he died owing creditors money. The traveler pays the dead man's debts and sees to a decent burial. Later in his travels, the man is saved by a mysterious event, which is credited to the dead man's grateful spirit. Hence, the Grateful Dead."

God bless.

s/ Michael Boyd

The Board of Supervisor unanimously approved June 10, 2014, a 10% sales tax, called the "Cannabis Business Tax ". A lawsuit was filed July 15, 2014 by local free speech and civil rights advocate Michael Boyd which challenges the proposed 10% sales tax and also challenges the existing 7% use tax imposed on "medical marijuana" based on the State Board of Equalization's justification for the tax as "retail sales of marijuana and any other illegal drugs or property, are subject to sales or use tax to the same extent as is any lawful retail sale of tangible personal property". Just because something is illegal doesn't make it legal to tax it. No statutory authority exists for such tax making it unlawful.

Prior to passage by Congress of H.R. 4660 (2014) existing federal law prohibited the manufacture, possession, sale or distribution of marijuana, including marijuana, as within the definition of "medicine". H.R.4660 passed the House on May 30, 2014. Section 542 defines "medical marijuana" thereby exempting it from federal drug enforcement laws stating it "Prohibits the use of funds made available by this Act for `preventing specified states from implementing their own laws authorizing the use, distribution, possession, or cultivation of medical marijuana' ".

Mr. Boyd said, "The Board of Supervisors think that it is OK to tax the medicine of people who are seriously ill, many, near death, who get no relief from their suffering, except through the relief medical marijuana brings them. The Board's action only serves the forces of socioeconomic terrorism of the poor that comes from viewing people's medicine as more money for cops, and the view their medical marijuana is an illegal substance under federal law. Well not any more thanks to H.R. 4660. Please vote NO on the Board's unlawful tax on "medical marijuana".

s/ Michael E. Boyd

Rebuttal to Arguments Against
Don't be fooled by an argument that the County is legally prohibited from regulating or taxing the sale of medical cannabis (marijuana).

The recent California Supreme Court decision in Riverside v. Inland Empire gives the County broad authority to regulate safe, compassionate access to medical cannabis by people in our community.

H.R. 4660, not currently law, simply states that any funds appropriated by the Act cannot be used to prevent California from passing its own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.

The argument opposing this measure states that the County tax will be 10%. This is not true. The tax initially will be 7% and any subsequent change will be subject to public review.

Medical cannabis is legal in California and Santa Cruz. However, making sure that growing and using it is done responsibly creates a financial burden on our County.

Medical cannabis is not just like every other medicine. The Sheriff's Office, Planning Department, County Fire, and other County offices need to monitor the cultivation and dispensing of this medicine.

County taxpayers should not have to pay for the services to protect our community from illegitimate and illegal operators. It is only reasonable that medical cannabis businesses help pay these costs, and in fact, the Association for Standardized Cannabis, which represents most of these businesses, supports this measure.

Low income patients will continue to have access to low or no cost medicine.

Join us in voting YES ON MEASURE K.

s/ Ben Rice*
Attorney for Association for Standardized Cannabis
s/ Neal Coonerty
Santa Cruz County 3rd District Supervisor
s/ John Leopold
Santa Cruz County 1st District Supervisor
s/ Katherine Beiers
Former Mayor, City of Santa Cruz
s/ Scott M. Jalbert
Chief, Santa Cruz County Fire Department

  • Signing on behalf of the organization listed below the name.

Full Text of Measure K
To read the full text of this measure, see the following Web page from the County Elections office:

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Created: July 23, 2015 14:58 PDT
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