HomeMy WebLinkAboutFIN 2019-11-12 Item 2D - Discussion - Marijuana Retail Zoning ConsiderationsCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Laurel Humphrey, Council Analyst
CC: Mayor Ekberg
DATE: September 12, 2019
SUBJECT: Marijuana Retail Zoning Considerations
ISSUE
Chair McLeod has requested the Committee review considerations around expanding opportunities
for marijuana retail establishments through zoning. After a preliminary discussion on February 25,
2019, information requested by Committee members includes other cities' experiences, public safety
concerns, financial impact, and changes to state law or implementation
BACKGROUND
Initiative 502 passed in November 2012 and created a comprehensive regulatory approach on
marijuana with state -licensed producers, processors and retailers. Through the rulemaking process
the Liquor and Cannabis Board adopted regulations on the number of retail store licenses for
jurisdictions, determining a maximum of 2 for Tukwila. The state has issued licenses for both: Mount
Baker Retail Partnership, LLC (12539 E Marginal way S) and Forbidden Flower (13003 Tukwila
International Boulevard).
On September 3, 2013, the City Council adopted Ordinance 2407 to implement Initiative 502, which
received a yes vote in all but one Tukwila precinct. In Tukwila, marijuana retailers, producers and
processors are permitted uses in Tukwila Valley South and Heavy Industrial Zones, subjectto the
1,000-foot exclusion rule. In 2015, 2SSB 5052 and HB 2136 allowed cities to reduce buffers from 1000
to 100 feet around all entities except elementary and secondary schools and public playgrounds. In
2017, the City Council received two separate requests to expand permitted marijuana retail zones but
denied both on February 13, 2017.
DISCUSSION
The state marijuana excise tax and its distributions has changed overtime and can be altered in any
future legislative session. The State currently taxes marijuana through a single excise tax of 37% at the
time of retail sale, in addition to the regular state and local sales tax, and $30M of that revenue is
shared with cities, towns and counties. There are two components to the distributions: 1) per capita
share to all jurisdictions that allow the siting of producers, processors and retailers; 2) retail share to
all jurisdictions where licensed retailers are physically located and in proportion to total statewide
retail sales. Tukwila does not have any marijuana businesses and therefore does not receive sales -
based revenue. Tukwila's per capita distribution has been:
Year*
Revenues
2019 (through June)
11,513.60
2018
30,275.81
2017
4,697.34
`City Fiscal Year Jan 1 - Dec 3
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INFORMATIONAL MEMO
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It is difficult to estimate what Tukwila would receive for its retail share if the two state -issued licenses
were active businesses. The formula depends not only on population but also on marijuana retail
sales as a proportion of total retail sales, as well as the number/total population of cities and counties
that prohibit marijuana. MRSC used to offer an estimate calculator but discontinued it due to
complexity of the formula.
The chart below shows the 2018 marijuana excise revenue for neighboring cities:
City (number of locations)
Population
2018 Marijuana Excise Revenue*
Burien (2)
51,671
$79,698
Auburn (2)
80,776
$182,375
Des Moines (1)
31,238
$90,725
Renton (3)
101,379
$201,378
'State Fiscal Year: July 1 - June 30
Crime & Safety around Retail Locations
While the private recreational and medical use of marijuana is legal, police officers may arrest
individuals for driving under the influence of marijuana and they may issue citations for consuming
marijuana in public.
Earlier this year, Commander Harrison provided an analysis of crime reports from the other valley
cities that allow retail marijuana: Auburn (2 locations), Des Moines (1 location), and Renton (3
locations). Des Moines had the highest number of calls at the business address (52 from Jan 2018 -
Feb 2019). Of the 52 calls in Des Moines, only 21 were criminal in nature, while the other 31 were
service -type calls (alarms, disputes, welfare checks, fire assist, solicitor, unwanted and/or suspicious
subjects). The Des Moines location (23400 Pacific Highway South) would be an area that is high in foot
traffic and more likely to have the types of calls generated when there are many pedestrians in the
area.
From January 2017 to February 2019, the two Auburn locations had a total of 13 case reports each (.52
cases per month per location). Auburn did not provide their call types/volume. The Auburn totals
were as follows: 6 thefts, 8 trespasses, 3 burglaries, 5 alarms, 1 robbery, 1 auto theft.
From January 2017 to February 2019, the three Renton locations had a total of 25 case reports (.33
cases per month per location). Most of the Renton case reports were for theft (9 cases). They also had
a total of burglaries and 1 robbery at these locations. Renton did not provide any call information,
only case reports taken. The Renton totals are as follows: 9 thefts, 4 burglaries, 1 robbery, 2 assaults, 2
identity thefts, 2 warrant arrests, 2 recovery OSA stolen vehicles, 1 harassment, 1 vehicular assault, 1
suspicious person/situation.
A Liquor and Cannabis Board agent provided some additional information. Between January 2017 and
February 2019, of the 9 retail locations, there were 9 robberies. Six of the locations were robbed, 3
were robbed twice. All the robberies involved the use of a firearm. During one of the robberies, an
employee was shot, during another, an employee was "pistol-whipped." One of the businesses was
also the victim of an attempted burglary that involved the burglar shooting at the door locks in an
unsuccessful attempt to gain entry. It should be noted that the Liquor and Cannabis Board only has
information on felony crimes that occurred inside of the business; they don't track the misdemeanors
or anything that happened outside in the parking lot or surrounding areas.
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INFORMATIONAL MEMO
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RECOMMENDATION
Staff is seeking Committee direction on next steps. If a majority of the City Council wishes to expand
the zoning for retail marijuana, it would require ordinance development and a public outreach and
hearing process that would need to be factored into the 2020 work plan.
ATTACHMENTS
Map
Marijuana Excise Tax Excerpt from Revenue Guide for Washington Cities & Towns
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32
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Zoning Districts
where Marijuana
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White Areas = Locations restricted by
WSLCB and zones where marijuana
businesses are not permitted
Date Saved: 03/14/2015 1:49,41 PM
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Marijuana Excise Tax
Quick Summary
• A portion of the state's marijuana excise tax is distributed to cities and counties depending on
their marijuana policies.
• Two separate components:
o Per capita share distributed to all cities and counties that do not prohibit marijuana
businesses.
o Retail share distributed to cities and counties where marijuana retailers are located,
in proportion to statewide marijuana revenues.
No clear guidance on use of revenues, but stated intent of 1-502 is that marijuana legalization
will "[allow] law enforcement resources to be focused on violent and property crimes [and
generate] new state and local tax revenue for education, health care, research, and substance
abuse prevention."
RCW: 69.50.540(2)(g)
Initiative 502 (1-502), which was approved by voters in 2012, legalized recreational marijuana and
authorized marijuana excise taxes. Marijuana excise taxes are imposed and collected by the State of
Washington; as of 2018, the state imposes a 37% marijuana excise tax on the retail sale of marijuana,
marijuana concentrates, and marijuana -infused products (RCW 69.50.535 and WAC 314-55-089).
Cities and counties may not impose additional local excise taxes upon the sale of marijuana. However,
the state shares some of the excise tax revenues with cities and counties, as mandated by 1-502.61 The
actual revenues received by cities depend on legislative appropriations from the state budget. The
state legislature has previously attempted to reduce local marijuana excise tax distributions, and like all
shared revenues these distributions could be changed in future legislative sessions.
Marijuana excise tax distributions depend in significant part upon local marijuana policies and
regulations. The regulatory approach that each city adopts, as well as the number of local marijuana
retailers, will determine whether the city receives any marijuana excise tax revenue (and how much).
Eligibility and Distribution Formula
There are two separate components to marijuana excise tax distributions:
Per capita share: Distributed on a strictly per capita (population) basis to all cities, towns, and
counties that allow the siting of marijuana producers, processors, AND retailers. Any jurisdiction
that prohibits marijuana producers, processors, OR retailers is not eligible.
Retail share: Distributed to all cities, towns, and counties where licensed marijuana retailers are
physically located, and in proportional share to total statewide marijuana retail sales.
60 The intent of 1-502 states, among other things, that it will "[generate] new state and local tax revenue" [emphasis
added], although it does not specify how the revenue will be shared with local governments or how much will be shared.
Revenue Guide for Washington Cities and Towns I Last Updated February 2019 131
35
The different distribution formulas mean that some jurisdictions will receive both the per capita and
retail distributions, while others may receive only one or the other, and some jurisdictions will receive
neither. The chart below shows a few hypothetical scenarios to illustrate the differences.
Hypothetical Marijuana Excise Tax Distribution Scenarios Eligible for per Eligible for
capita share? retail share?
City allows marijuana production, processing, and retail and has at least
Yes
Yes
one retailer located within the jurisdiction.
City prohibits marijuana entirely and has no retailers located within the
No
No
jurisdiction.
Town took no action to prohibit marijuana, but is small enough that no
marijuana businesses can locate there under state law due to the buffer
Yes
No
requirements.
City prohibits marijuana producers and processors but allows retailers
No
Yes
and has at least one retailer located within the jurisdiction.
City currently prohibits new marijuana businesses but has existing retail-
No
Yes
ers that are grandfathered in.
City prohibits marijuana retail and has no retailers but allows marijuana
No
No
production and processing.
Each year by September 15, the LCB must provide the state treasurer with the annual distribution
amount for each county and city. For the most recent legislative appropriations and distribution
estimates, refer to our annual Budget Suggestions publication, released every year at the end of July.
Use of Revenues
The restrictions on the use of marijuana excise tax revenues are somewhat murky, as there is no
clear statute stating how the funds must be used. However, the notes in RCW 69.50.540 reference
RCW 69.50.101 and the stated intent of 1-502, which states that marijuana legalization will "[allow] law
enforcement resources to be focused on violent and property crimes [and generate] new state and
local tax revenue for education, health care, research, and substance abuse prevention."
Timing of Receipts
Payments are distributed quarterly on the last business day of March, June, September, and December.
The State Treasurer's Office distributes both the "per capita" and "retail" shares together in one
payment using the same BARS code.
Revenue Guide for Washington Cities and Towns I Last Updated February 2019
132
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