Loading...
HomeMy WebLinkAboutCORRESPONDENCE - #1 Orozco, Norma From: Edwin Chu <edwinchu@mygreennetwork.com> Sent: Friday, July 29, 2022 2:58 PM To: eComment Subject: July 29, 2022 Special City Council Meeting Agenda Item #1, Municipal Code Changes Related to Cannabis Dear City Council and City Staff: My name is Edwin Chu from KGJMK Opco Inc. dba My Green Network and we are a licensed cannabis manufacturing and distribution facility in the City of Santa Ana. As a licensed manufacturer, I am respectfully requesting the following regarding municipal code changes related to Cannabis. 1) Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2, 2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2) Reduce the gross receipts tax on cannabis retail, manufacturing, and distribution businesses as follows: Category Current Rate Future Rate Adult-use Cannabis Retail Business (including Delivery) 8%/$25 sgft. 5%/$12.50 sgft. 1 Distribution 6%/$4 sgft. 1%/$2 sgft. Manufacturing 6%/$10 sgft. 1%/$5 sgft. Cultivation 6%/$10 sgft. 1%/$5 sgft. These are the two most important issues facing me as a cannabis operator in the City of Santa Ana. A. The ability to do business with local Santa ana cannabis retail stores by providing the stores with manufacturing and distribution services. When negotiating with the local stores, they rejected our business services due to the 6% City of Santa Ana manufacturing and distribution tax. 2 B. Additionally, we had distribution opportunities with licensed third parties, but the third parties decided to engage other distribution companies in Costa Mesa and Long Beach because of the 1% distribution tax rate in those cities. Sincerely, Edwin Ghu COO Phone:\+1 (781) 366 3533 3 Orozco, Norma From: Kenton Wong <kenton@mygreennetwork.com> Sent: Friday, July 29, 2022 2:58 PM To: eComment Subject: RE: July 29, 2022 Special City Council Meeting Agenda Item #1, Municipal Code Changes Related to Cannabis Dear City Council and City Staff: My name is Kenton Wong from KGJMK Opco Inc. dba My Green Network and we are a licensed cannabis manufacturing and distribution facility in the City of Santa Ana. As a licensed manufacturer, I am respectfully requesting the following regarding municipal code changes related to Cannabis. 1)Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2, 2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2)Reduce the gross receipts tax on cannabis retail, manufacturing, and distribution businesses as follows: Category Current Rate Future Rate Adult-use Cannabis Retail Business(including Delivery) 8%/$25 sgft. 5%l$12.50 sqft. Distribution 6%/$4 sgft. 1%/$2 sgft. Manufacturing 6%/$10 sgft. 1%/$5 sgft. Cultivation 6%/$10 sgft. 1%/$5 sgft. These are the two most important issues facing me as a cannabis operator in the City of Santa Ana. A) The ability to do business with local Santa ana cannabis retail stores by providing the stores with manufacturing and distribution services. When negotiating with the local stores, they rejected our business services due to the 6% City of Santa Ana manufacturing and distribution tax. B) Additionally, we had distribution opportunities with licensed third parties, but the third parties decided to engage other distribution companies in Costa Mesa and Long Beach because of the 1% distribution tax rate in those cities. Sincerely, Kenton Wong Kenton Wong Chief Communications Officer i Phone: +1 (323) 708 - 0975 Website: mygreennetwork.com RE: July 29, 2022 Special City Council Meeting Agenda Item#1, Municipal Code Changes Related to Cannabis Dear City Council and City Staff: My name is Ken Hwang from KGJMK Opco Inc. dba My Green Network and we are a licensed cannabis manufacturing and distribution facility in the City of Santa Ana. As a licensed manufacturer, I am respectfully requesting the following regarding municipal code changes related to Cannabis. 1) Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2, 2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2) Reduce the gross receipts tax on cannabis retail, manufacturing, and distribution businesses as follows: Category Current Rate Future Rate Adult-use Cannabis Retail Business (including Delivery) 8%/$25 sgft. 5% /$12.50 sgft. Distribution 6%/$4 sgft. 1% /$2 sgft. Manufacturing 6%/$10 sgft. 1% /$5 sqft. Cultivation 6%/$10 sgft. 1% /$5 sgft. These are the two most important issues facing me as a cannabis operator in the City of Santa Ana. A) The ability to do business with local Santa ana cannabis retail stores by providing the stores with manufacturing and distribution services. When negotiating with the local stores,they rejected our business services due to the 6%City of Santa Ana manufacturing and distribution tax. B) Additionally,we had distribution opportunities with licensed third parties, but the third parties decided to engage other distribution companies in Costa Mesa and Long Beach because of the 1%distribution tax rate in those cities. Sincerely, Ken Hwang Orozco, Norma From: Andrea Lupear <alupear@minervaproducts.com> Sent: Friday, July 29, 2022 2:20 PM To: eComment; Christian Zea Subject: Cannabis Tax Issue as a Resolution-Code Change Request RE: July 29, 2022 Special City Council Meeting Agenda Item#1, Municipal Code Changes Related to Cannabis Dear City Council and City Staff: My name is Andrea Lupear and I am an owner of Minerva Products, Inc, a woman and minority owned business. We are a licensed cannabis manufacturing and distribution facility in the City of Santa Ana. As a licensed manufacturer, I am respectfully requesting the following regarding municipal code changes related to Cannabis. 1) Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2, 2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2) Reduce the gross receipts tax on cannabis retail, manufacturing, and distribution businesses as follows: Category Current Rate Future Rate Adult-use Cannabis Retail Business(including Delivery) 8%/$25 sgft. 5%/$12.50 sgft. Distribution 6%/$4 sgft. 1%/$2 sgft. Manufacturing 6%/$10 sgft. 1%/$5 sgft. Cultivation 6%/$10 sgft. 1%/$5 sgft. These are the two most important issues facing me as a cannabis operator in the City of Santa Ana. With a tax rate of 6%, our business is left on an unequal footing with the black market cannabis industry, which is rampant throughout Santa Ana and the state of California. We struggle to hire new, local employees, and we have less money to donate to social causes. By lowering the tax rate to 1%,we will be able to reinvest in our business, grow sales and contribute to Santa Ana via job growth,training and business improvements. Respectfully, MII\i FRVA Andrea Lupear President and Chief Pastry Officer Minerva Products Inc. 415.420.8682 1 Andrea Zinder 324 President International Vice President Matt Bell A Voice for Working California Secretary-Treasurer To: Santa Ana City Staff&Council From: Matt Bell, Secretary Treasurer, United Food and Commercial Workers Local 324 Re: Suggested Modifications to Proposed Cannabis Ordinance On behalf of the 20,000 members of United Food and Commercial Workers (UFCW) Local 324, including approximately 250 cannabis workers within the City of Santa Ana, we want to express our appreciation for the City's interest in exploring new ideas to maintain the economic viability of the cannabis industry. Santa Ana was the first city to regulate cannabis in Orange County, and we believe that it continues to be a model for future cities in the region. It is our understanding that the City of Santa Ana is considering the expansion of cannabis permits to lounges and events, as well as the reduction of taxes on both the supply side and retail, and several other regulatory changes. Undoubtedly, these changes would be done to improve the profitability of cannabis operators. UFCW has always been a partner with the industry to support these kinds of measures because we believe that a healthy and profitable industry will benefit workers. However, we must note that many of the licensed cannabis operations within the city continue to offer minimum wage jobs with little to no benefits. Under the circumstances, we believe that the City should demand greater assurances that any loss in tax revenue for the people of Santa Ana will be offset with the assurance of better jobs in this industry. Given the scope of the changes that are being considered, we advocate that any tax break must be coupled with defined performance standards with respect to wages, local hiring, and job training. ESTABLISHING TAX CREDITS FOR RETAIL OPERATIONS Rather than lowering the retail tax rate for all operations from 8%, we propose that the City establish criteria that, if achieved, result in a tax rebate. We suggest that the following criteria would both improve job quality and increase local access to these jobs. ■ Rebate for retail operations that pay all employees in excess of 115% of the California minimum wage. This percentage should increase over time to ensure that wages don't become stagnant. • Rebate for operations where at least 40% of employees reside in low-income census tracts in the City of Santa Ana • Rebate for operations that can demonstrate that 25% of its qualifying employees completed at least one training offered by a High Road Training Partnership that is recognized by the State of California. Proof of active participation in this program must be demonstrated with a signed letter confirming State recognition. DEFINING "BONA FIDE LABOR ORGANIZATION" Currently, Santa Ana Municipal Code Section 40-2 uses the California Business and Professions Code 26001(x) to define "Labor Peace". While that definition requires an agreement with a "Bona Fide Labor Organization", it does not go on to define "Bona Fide". 8530 Stanton Ave., P.O. Box 5004, Buena Park, CA 90622-5004 • (714) 995-4601 • (800) 244-UFCW • Fax(714)995-8214 •www.ufcw324.org Page 2 This has led some operations to sign agreements with illegitimate actors established for the express purpose of circumventing the intent of the labor peace provision, which is to lay out the ground rules for how future workers can decide to form a union. We suggest that additional language is needed that clearly defines a Labor Organization as an entity that: • Represents employees in California as to wages, hours and working conditions, • Is free of domination or interference by any employer and has received no improper assistance or support from any employer. MODIFICATION OF BACKGROUND CHECK LANGUAGE FOR EMPLOYEES While we recognize that the State of California requires background check for all employees in the cannabis industry, the City of Santa Ana goes beyond what is required by state law. Currently, the City prohibits workers have been convicted of any drug charge in the preceding four years from working in the industry. We believe that the City should view the legal cannabis industry as a means to address the wrongs of the war on drugs, not to double down on them. Many of our members have worked in black market or trap"cannabis dispensaries and have received criminal charges for their work in that industry. This law explicitly prohibits them from working in the same industry in the legal market. Sadly, some companies also pass the cost of completing this background check, which often exceeds $75, to prospective employees, creating further barriers to entry in the industry for low-income people. We appreciate our continued partnership with the City on this issue. Please feel free to contact me or our Political Director, Derek Smith, if you have any questions or concerns. Sincerely, 0 Vb 9 dl UFCW Local 324 Matthew Bell Secretary-Treasurer TPOPICAMMA July 26,2022 1628 S Grand Ave Santa Ana,CA 92705 RE:Request to Set Hearing to Lower Cannabis Taxes Dear Council Member: My name is Rouzbeh Vandatpour.I am part of the OCAA and I am writing this letter to request an update on the current situation of cannabis taxes in Santa Ana. As a minority-owned cannabis business in your city as part of the industry which has brought millions of dollars to the city,we hope you address the most pressing concern facing your cannabis stakeholders today—Taxes. Previously,the OCAA has provided significant information,research,and facts in support of lowering cannabis taxes in Santa Ana.This comes directly from the operators in your city.We are the ones directly impacted by the city's delays on taxes. Our understanding was that by July 19,2022 the City would have a hearing and decide on our proposed recommendations to lower cannabis taxes to 1%for supply chain and 5%for retail.It is now my understanding that City staff has been asked to do a study on lowering taxes to 4%and delay lowering taxes for another 2 months.In my opinion,anything above 1%the City should just keep taxes at 6%and as a stakeholder,we can make arrangements with other more cannabis friendly jurisdictions and do business there instead. My ask is as follows: 1) Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2,2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2) Reduce the gross receipts tax on cannabis retail,manufacturing,and distribution businesses as follows: Category Current Rate Future Rate Adult-use Cannabis Retail Business(including Delivery) 8%/$25 sgft. 5%/$12.50 sqft. Distribution 6%/$4 sgft. 1%/$2 sgft. Manufacturing 6%/$10 sgft. 1%/$5 sgft. Cultivation 6%/$10 sgft. 1%/$5 sgft. I am an actual owner/operator of Santa Ana.When I lose business,this means I cannot hire employees,pay salaries, expand my business,or pay taxes.Tying any other matters into the tax resolution,whether it is based on prevailing TPOPICAHMA wages,etc.will only serve to confuse the situation,hurt your stakeholders,the employees of stakeholders,and your entire cannabis community. The taxes should be cleanly separated and voted on immediately. Any other considerations can be discussed after the resolution is completed. Most importantly,if Santa Ana continues to delay voting on lowering cannabis tax,emerging markets will gain our customer loss to lower taxes. If taxes were lowered to 5%,we believe we would retain 90%to 95%of our customer base for a loss of 5%to 10%of our customers.This could be offset by potentially acquiring 5%to 10%new customers because of being able to offer lower tax rates to consumers compared to neighboring cities. In the worst-case scenario, 10%of our customers leave and we see 5%of new customers which would equate to a loss of only$2,146,303.10 in gross revenue per year,offset by 5%new customers we would earn$21,463,031 for the year.The City would still receive$1,019,493 while we retain 90%or more of our customers and acquire 5% new customers. In the optimal scenario,a 5%loss of customers with a 10%acquisition of new customers,we would exceed our projections and we could potentially earn$21,463,031 for the year.The City would receive$1,126,809.00 in tax revenue. While we would still lose 5%of our existing base,we have the potential to acquire new loyal customers by beating other cities. If taxes remain the same or anything above 8%for retail,I can guarantee you that we will lose 40%of our customer base to neighboring cities. We hope you take swift action to lower taxes so we can help bring the city tax revenue.Failing to lower taxes to 5% indicates you have decided to not listen to your stake holders,and you do not want to place Santa Ana as a non- competitive cannabis location.If this is the case,I am respectfully asking for an answer so that I can make informed business decisions on how to run my business to survive. Thank you for your attention and expediency on this matter. Sincerely Rouzbeh Vandatpour Owner,Tropicanna SENT VIA EMAIL Vicente Sarmiento Phil Bacerra Thai Viet Phan Mayor Mayor Pro Tern Council Member 22 Civic Center Plaza, Santa 22 Civic Center Plaza, Santa 22 Civic Center Plaza, Santa Ana, Ana, CA 92701 Ana, CA 92701 CA 92701 vsarmientogsanta-ana.org pbacerragsanta-ana.org TPhanksanta-ana.org TPOPICAMMA David Penaloza Jessie Lopez Johnathon Ryan Hernandez Council Member Council Member Council Member 22 Civic Center Plaza, Santa 22 Civic Center Plaza, Santa 22 Civic Center Plaza, Santa Ana, Ana, CA 92701 Ana, CA 92701 CA 92701 dpenaloza e santa-ana.org JessieLopez a Santa-ana.org JRyanHernandezksanta-ana.org Nelida Mendoza Council Member 22 Civic Center Plaza, Santa Ana, CA 92701 nmendoza@santa-ana.org Orozco, Norma From: Matt Rowbotham <mrowbotham@ouidconfections.com> Sent: Friday, July 29, 2022 1:00 PM To: eComment Subject: Local Cannabis Manufacturing Taxes Hi There, My name is Matt Rowbotham and I am writing because I am a co-owner of Oui'd confections, a small 3 person edibles manufacturing company based in Santa Ana. Being a small business in the cannabis industry is almost a kin to David and Goliath without having the sling to throw rocks. There are taxes and cost and fees at every operational step that really make it challenging for small operators to have a chance at success. If the current 6% tax rate is to stay in place this will affect my ability to hire within the Santa Ana community in the future and grately stunt the potential for our company to grow and give back. I am in strong support of lowering the tax rate to 1% for manufacturing because this will overall be helpful for the cannabis community which in turn will be good for the community of Santa Ana. More jobs, more thriving small business and a stronger sense of community are why I am in support of lowering the cannabis manufacturing tax from 6%to 1%. Thank you Matt Rowbotham Oui'd Confections i Orozco, Norma From: McKenna Lelah <mlelah@ouidconfections.com> Sent: Friday, July 29, 2022 11:52 AM To: eComment Subject: OCAA Cannabis Tax Reduction Recommendation Proposal RE: July 29, 2022 Special City Council Meeting Agenda Item #1, Municipal Code Changes Related to Cannabis Dear City Council and City Staff: My name is McKenna Lelah, I am the Director of Operations at Oui'd Confections and we are a licensed cannabis manufacturing and distribution facility in the City of Santa Ana. As a licensed manufacturer, I am respectfully requesting the following regarding municipal code changes related to Cannabis. 1) Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2, 2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2) Reduce the gross receipts tax on cannabis retail, manufacturing, and distribution businesses as follows: Category Current Future Rate Rate Adult-use Cannabis Retail 8% / $25 5% / Business (including Delivery) sqft. $12.50 sqft. Distribution 6% / $4 1% / $2 sqft. sqft. Manufacturing 6% / $10 1% / $5 sqft. sqft. Cultivation 6% / $10 1% / $5 sqft. sqft. These are the most important issues facing me as a cannabis operator in the City of Santa Ana. Contrary to popular belief, while the cannabis industry has high yearly sales, the profitability for businesses in the cannabis industry is not as high as most people think due to the taxes. Starting with the cannabis farmers, an already difficult industry to be in, the high taxes that they get hit with trickle down to the manufacturers which increase the purchase price of their product by so much, they end up paying the price. A small company like Oui'd Confections is trying to make a difference in this industry by offering high quality edibles starting with our raw ingredients where we use high quality cannabis that is healthier 1 and safer for the consumer. Using high quality ingredients increases our costs which increases our sell price. We are at the point where with the dispensary mark-up and taxes, the consumer is paying over $60 for a product that cost the dispensary $20. Due to this large increase in purchase price, consumers are going to continue to gravitate toward low quality edibles using solvents such as butane and ethanol produced by large companies who are monopolizing the market. Deterring consumers from making larger purchases hurts dispensaries which in turn hurts the city's local economy. We want consumers making large purchases just as much as you do but if the taxes continue to be this high, it becomes understandably unreasonable for the consumer which continues the vicious cycle explained above. If the pandemic has taught us anything, it is that we need our small local businesses to stay alive now more than ever. Help us keep Santa Ana diverse and competitive in this industry. Sincerely, McKenna Lelah McKenna Lelah Operations Coordinator Oui'd Confections Q (214)773-3733 www.ouidconfections.com She/Her ❑x �. OUI'D 2 Orozco, Norma From: Matthew Kim <mkim@ouidconfections.com> Sent: Friday, July 29, 2022 11:13 AM To: eComment Subject: OCAA Cannabis Tax Reduction Recommendation Proposal RE: July 29, 2022 Special City Council Meeting Agenda Item #1, Municipal Code Changes Related to Cannabis Dear City Council and City Staff: My name is Matthew Kim and I am a Co-founder and Chief Executive Officer of Oui'd Confections, we are a licensed cannabis manufacturing and distribution facility in the City of Santa Ana. As a licensed manufacturer, I am respectfully requesting the following regarding municipal code changes related to Cannabis. 1) Bifurcate the Cannabis Tax resolution and set it for city council meeting on August 2, 2022 to lower cannabis taxes immediately per proposed OCAA recommendations. 2) Reduce the gross receipts tax on cannabis retail, manufacturing, and distribution businesses as follows: Category Current Future Rate Rate Adult-use Cannabis Retail 8% / $25 5% / Business (including Delivery) sqft. $12.50 sqft. Distribution 6% / $4 1% / $2 sqft. sqft. Manufacturing 6% / $10 1% / $5 sqft. sqft. Cultivation 6% / $10 1% / $5 sqft. sqft. These are the two most important issues facing me as a cannabis operator in the City of Santa Ana. Oui'd Confections is a very small business consisting of 4 managers including myself, and no employees, such tax relief will help us extremely. Our team has a combined 45 years of experience in Michelin starred restaurants all over the US and we are trying to bring our experiences in cooking and hospitality to the cannabis industry. This industry consists of mainly large companies where money may not be an issue, but for companies like us, we are barely surviving to stay afloat. We believe that creating tax relief will help every small company succeed and that if it starts with cultivation and manufacturing, it will organically trickle down to distribution and retail. For instance, 1 lowering the taxes for manufacturers will lower the costs for themselves and in return lower the fees and costs for distribution who they rely on. And then manufacturers and distributors will be able to pay themselves to survive, hire more local employees and help grow and compete with pre-existing corporate companies. One important tax relief that starts at the end of the process would be lowering taxes for retail businesses or delivery services because lowering those taxes will help consumers. Dispensaries could lower the MSRP on their products and not have to charge as much to make up for the high taxes. This will also help customers or the public to afford, and continue to help stimulate the economy during this recession. We also believe that the only way to help break the stigma of cannabis and help federally legalize cannabis will be to help small businesses prevail. Like how local restaurants are compared to a fast food chain, by focusing on smaller local businesses that support the community. Given all the listed categories need and rely on each other to be sustainable, a tax break for all categories is necessary to legitimize and support the local economy. Lowering taxes will only improve sales, quality, sustainability and job security. Lastly, helping small local businesses will really show that Santa Ana is the forefront of cannabis and that you really understand how important small businesses are to each city. You can help lead the way and be the standard of a model city who truly understands how cannabis will improve a city by creating jobs, and opportunities for chefs and first time business owners. Sincerely, Matthew Kim y yr INN Matthew Kim m, r ' CEO I Oui'd Confections (708)269-5210 O U I' " D www.ouidconfections.com @ 2