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Record of Proceedings

Sacramento Law and Legislation Committee Meeting - April 19, 2022

Law and Legislation Committee — Tuesday, April 19, 2022
BodySacramento, California
SessionLaw and Legislation Committee
DateTuesday, April 19, 2022
StatusFILED
Video Record
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Transcript — Verbatim
0:01

And Councilmember Garrett's joining us now.

0:12

All right, Mindy and Mr.

0:14

Jerum here.

0:15

Okay.

0:18

Great.

0:18

Uh thank you.

0:19

Let's go ahead and call this meeting of the Larmist License Committee to order.

0:23

Adam Clerk, please call the role to establish quorum.

0:26

Councilmember Gatta.

0:28

Here.

0:29

Councilmember Harris.

0:31

Here.

0:31

Councilmember Valenzuela.

0:33

Here.

0:34

Then Chair Shaneer.

0:35

And here.

0:36

Thank you very much.

0:37

We're going to go ahead and do the land acknowledgement and the pledge, Ms.

0:40

Valenzuela.

0:41

Would you care to lead us in those, please?

0:44

Sure.

0:45

Happy to chair.

0:46

Please rise for the opening acknowledgments in honor of Sacramento's indigenous people and tribal lands.

0:52

To the original people of this land to the Nissanon people, the Southern Maidu, Valley and Plains, Mewak, Putwin Winton peoples and the people of the Wilkes and Rancheria.

1:01

Sacramento's only federally recognized tribe.

1:04

May we acknowledge and honor the native people who came before us and still have beside us today on these ancestral lands by choosing to gather today in the active practice of acknowledgement and appreciation for Sacramento's Indigenous People's History Contributions and Lines.

1:18

Thank you.

1:19

Now salutes and pledge and pledge allegiance to the flag of the United States of America and to the Republic for which it stands one nation.

1:32

Indivisible with liberty and justice for all.

1:35

Thank you.

1:36

Thank you, Councilwoman.

1:37

Appreciate that.

1:38

Um items on today.

1:41

Uh obviously, let's we'll go through the consent calendar.

1:44

We have our third workshop on cannabis, and then we have a resolution to take a look at.

1:50

Uh so let's start with uh items one, two, and three on the consent calendar.

1:54

Any comments on that, or if not, is there a motion?

2:02

Chair, I don't know if um this is going to happen now on the log or later, but I believe there was an update on the military equipment use policy process.

2:10

We'll we'll do it at the end of the meeting.

2:12

Okay, great.

2:12

Um, in that case, I'm happy to move consent.

2:14

Okay, is there a second?

2:16

Second, all right.

2:17

I have a motion and a second, please go ahead and call the roll.

2:20

Thank you.

2:20

And for the record, there's no hands raised to make public comment on the consent calendar.

2:24

Councilmember Gada.

2:26

All right, Councilmember Harris.

2:28

Hi.

2:29

Council Member Valenzuela.

2:31

Yes, and Chair Shineer.

2:33

Hi, thank you very much.

2:35

Uh let's go ahead to item four.

2:37

And again, this is our third workshop on cannabis.

2:39

We looked at ownership in the first one.

2:42

Uh, look at a number of things in the second workshop, including land use, most notably, and then today is really about um budget.

2:52

And so we'll we'll take a look at that and then come back uh later on next month um with hopefully a set of recommendations that we can work through that really emanate from all three workshops that we've had.

3:07

So I believe that we're gonna start with EPS today and then move to uh our our office of cannabis and Davina Smith, and then we will go to public comment and then come back for committee as we've done.

3:22

So uh David uh Zedner, is this you leading us off?

3:31

Or Davina, who's starting uh yes, it is uh EPS and looks like I'm able to start my video.

Discussion Breakdown — Share of Meeting
Cannabis Regulation█████████████████████████████████████████████52%
Youth Services████████████14%
Economic Development██████████11%
Public Safety██████████11%
Public Comments██████7%
Procedural███3%
Education Policy██2%
Summary of Proceedings

Sacramento Law and Legislation Committee Meeting Summary

The Law and Legislation Committee of the Sacramento City Council met on Tuesday, April 19, 2022, at 1:00 p.m. via teleconference to discuss fiscal and economic issues related to the cannabis industry and a resolution regarding public safety services. The committee approved the consent calendar, heard public comments, and forwarded the public safety resolution to the Budget and Audit Committee with a 3-1 vote.

Consent Calendar

  • Approved the Law and Legislation Log (File ID: 2022-00072).
  • Received and filed the Legislative Advocacy Correspondence (File ID: 2022-00070).
  • Approved the meeting minutes from March 29, 2022, and April 5, 2022 (File ID: 2022-00693).

All items passed unanimously with a motion by Member Valenzuela, seconded by Member Harris.

Public Comments & Testimony

Item 4 (Cannabis Workshop):

  • Kevin Hooks spoke in favor of tax breaks for social equity businesses, arguing that current thresholds are too low and that tax relief is needed to support core businesses until federal legalization.
  • Mindy Galloway, a core operator, emphasized the need for sustainability and lower taxes to drive consumers away from the unregulated market, and supported tax relief for core and small operators.
  • Diana Garcia, a social equity applicant, highlighted the heavy tax burden on the industry, including application fees, and requested tax relief across the board.
  • Joe Devon, representing the Northern California Cannabis Alliance, urged immediate action to lower taxes, stating that waiting for state/federal changes could push changes to 2024 or later. He noted that cannabis businesses pay significantly more in BOT compared to other businesses.
  • Kimberly Cargyle expressed that the industry is discriminated against by high taxes, noting that cannabis businesses pay a disproportionate share of taxes relative to their numbers, and called for lower taxes.

Item 5 (Public Safety Resolution):

  • Kevin McCarty attempted to comment on the cannabis item but was redirected; he acknowledged the public safety work but his comment was not relevant to the agenda item.

Discussion Items

Item 4: Workshop #3: Comprehensive Study of the Cannabis Industry Concerning Fiscal and Economic Issues

  • David Zender from EPS presented an economic impact analysis. He reported that the cannabis industry supports nearly 8,000 direct jobs and generates approximately $1.9 million in annual output. The annual net general fund surplus to the city is close to $20 million, with an additional $5.2 million from the Neighborhood Plan Fee.
  • EPS discussed state and federal tax issues, including the high state excise tax (with California's 15% excise tax built on an 80% markup) and the cultivation tax, which are seen as driving the illicit market. They noted that Sacramento's 4% local business operations tax (BOT) is comparable to neighboring jurisdictions.
  • Staff, led by Davina Smith (Cannabis Manager), provided details: permit fees range from $2,500 to $36,000 annually, with core businesses exempt; estimated permit fee revenue is $3.6 million for the coming fiscal year. Program expenditures are estimated at $5.7 million, exceeding permit fee revenue. The city has collected about $12.5 million in illegal cultivation penalties, and has received over $10 million in state grants for equity programs, with $6.8 million dispersed.
  • Staff made three recommendations: (1) monitor tax-related legislation and regional tax rates; (2) consider allowing different tax rates by business type and providing core-specific tax relief; and (3) consider identifying a permanent funding source for the core program.
  • Committee discussions included concerns about tracking complexity for differentiated tax rates, the need for flexibility to adjust taxes by sector, and the potential impact of state tax changes on local revenues. Councilmember Guerra suggested being aggressive in advocating for state tax reductions, using the state surplus as leverage, and considering full cost recovery for fees. Chair Schenirer emphasized the need to wait and see on federal and state actions before making large tax changes.
  • A follow-up workshop is scheduled for May 10, 2022, to discuss a consolidated set of recommendations.

Item 5: Resolution to Implement City’s Definition of Public Safety Services

  • Chair Schenirer presented the resolution, which would link increases in traditional public safety funding (police, fire, emergency services) to proportional percentage increases for youth prevention services. He framed it as a policy statement and a "floor, not a ceiling."
  • Councilmember Harris opposed the resolution, arguing that tying youth spending to public safety increases is arbitrary and that budget decisions should be based on data and analysis, not formulas.
  • Councilmember Valenzuela expressed support for increased youth funding but agreed with Harris that the linkage feels arbitrary; she advocated for a data-driven budget process.
  • Councilmember Guerra supported moving the resolution to the Budget and Audit Committee for deeper discussion, highlighting the need for predictable funding for youth programs.
  • A motion to forward the resolution to the Budget and Audit Committee with direction to finance for further analysis passed 3-1, with Harris voting no.

Key Outcomes

  • Cannabis Workshop: Committee directed staff to continue work and bring a consolidated set of recommendations to a special meeting on May 10, 2022, for final workshop discussion.
  • Public Safety Resolution: Motion to forward the resolution to the Budget and Audit Committee passed with a vote of 3-1 (Schenirer, Valenzuela, Guerra in favor; Harris opposed). The committee also directed the finance department to provide further analysis.
  • Military Equipment Ordinance: Staff announced that the ordinance will be brought to the Law and Legislation Committee on June 21, 2022, with a public comment portal to be launched.

The meeting adjourned at 2:49 p.m.

Meeting Transcript

And Councilmember Garrett's joining us now. All right, Mindy and Mr. Jerum here. Okay. Great. Uh thank you. Let's go ahead and call this meeting of the Larmist License Committee to order. Adam Clerk, please call the role to establish quorum. Councilmember Gatta. Here. Councilmember Harris. Here. Councilmember Valenzuela. Here. Then Chair Shaneer. And here. Thank you very much. We're going to go ahead and do the land acknowledgement and the pledge, Ms. Valenzuela. Would you care to lead us in those, please? Sure. Happy to chair. Please rise for the opening acknowledgments in honor of Sacramento's indigenous people and tribal lands. To the original people of this land to the Nissanon people, the Southern Maidu, Valley and Plains, Mewak, Putwin Winton peoples and the people of the Wilkes and Rancheria. Sacramento's only federally recognized tribe. May we acknowledge and honor the native people who came before us and still have beside us today on these ancestral lands by choosing to gather today in the active practice of acknowledgement and appreciation for Sacramento's Indigenous People's History Contributions and Lines. Thank you. Now salutes and pledge and pledge allegiance to the flag of the United States of America and to the Republic for which it stands one nation. Indivisible with liberty and justice for all. Thank you. Thank you, Councilwoman. Appreciate that. Um items on today. Uh obviously, let's we'll go through the consent calendar. We have our third workshop on cannabis, and then we have a resolution to take a look at. Uh so let's start with uh items one, two, and three on the consent calendar. Any comments on that, or if not, is there a motion? Chair, I don't know if um this is going to happen now on the log or later, but I believe there was an update on the military equipment use policy process. We'll we'll do it at the end of the meeting. Okay, great. Um, in that case, I'm happy to move consent. Okay, is there a second? Second, all right. I have a motion and a second, please go ahead and call the roll. Thank you. And for the record, there's no hands raised to make public comment on the consent calendar. Councilmember Gada. All right, Councilmember Harris. Hi. Council Member Valenzuela.

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