Council hears package to authorize retail marijuana licensing, fees and a new 5% retail-sales tax; zoning and buffer rules under review

City staff on Jan. 14 presented a multi-part package to implement retail marijuana sales and associated regulation following recent ballot action, covering licensing, fees, a 5% retail marijuana sales tax, and land-use rules for retail marijuana facilities.

Lee McCraig of the City Clerk’s Office described the licensing ordinance intended to incorporate retail marijuana into the city’s marijuana business licensing structure. Mona Hajoy, the city’s budget manager, outlined proposed fees and revenue projections. She said proposed fees include a $3,000 medical marijuana application and $3,050 medical renewal; a $4,000 retail marijuana application and $4,050 retail renewal. Using recent license counts and renewal assumptions, Hajoy projected roughly $521,000 from medical license activity and $504,000 from initial retail licensing, for a combined projection of about $1,025,000. She said the current budget already assumed $675,000, leaving approximately $350,000 of additional revenue under the fee proposal.

Sherry McDaniel, the city’s chief financial officer, explained a proposed new sales-tax code section to implement a 5% retail-marijuana sales tax. McDaniel said the ballot included two separate items in November 2022 — a sales-tax authorization and a separate authorization to permit retail sales — and that staff is preparing code now that the public has authorized retail sales. “Because the authorization did not pass, we did not take action on the sales tax item that had been approved. Now that the citizens authorized the retail, we now need to take action on that sales tax,” McDaniel said. The administration estimates the new 5% tax might yield on the order of $2 million per year, though the city has not budgeted or appropriated those revenues pending a clearer count of retail conversions.

City planning staff and the consultant team outlined proposed zoning and land-use regulations for retail marijuana stores and related facilities. Planning Director Kevin Walker and staff explained the draft Unified Development Code amendments that would make retail marijuana a permitted land use in defined commercial and industrial districts, ban on-premises consumption at retail locations, require adequate ventilation to prevent odors, prohibit outdoor grow operations, and align parking and operational standards with existing medical marijuana rules. The draft includes definitions for retail testing centers and other facility types. Planning commission recommended two changes last week: replacing a proposed 1-mile buffer from sensitive uses with a 1,000-foot separation and removing a section that dealt with a potential future city-initiated repeal so the code would reflect current voter-approved language.

Council members asked about enforcement and complaints tied to marijuana odors; staff said code enforcement and licensing processes are available and may lead to license or zoning enforcement if mitigation fails. Several councilors asked for a full redline ordinance and more time to examine details ahead of the upcoming vote schedule. Staff noted a constrained timetable: some state and local actions and deadlines require the city to move quickly to put licensing, fees and tax sections in place to accept retail license applications by Feb. 10, per ballot language.

No formal votes were taken at the Jan. 14 work session; the council convened the presentations and asked staff to prepare the ordinances and fee resolutions for upcoming hearings.