Los Gatos Town Council is scheduled to discuss making marijuana dispensaries legal at its next meeting on Tuesday, Jan. 18. The move would increase local tax revenue.
After marijuana was legalized in California in 2016, town council passed ordinances to ban the selling and growing of cannabis in Los Gatos out of fear that it might “bring in more crime and nefarious characters to town,” Los Gatos Mayor Rob Rennie said.
Now, the town is looking for ways to boost local tax revenue to help offset rising costs like pension payments. Rennie said city staff will present a report to council at the Jan. 18 meeting to discuss next steps.
“Expenses, particularly pension costs, continue to rise, so we are looking for more options, more revenue generation in order to be able to keep up and sustain the service level that we provide in Los Gatos,” Rennie said. “Making marijuana dispensaries legal, would, they estimate, bring in another $1 million a year in taxes.”
Depending on the results of the staff report and public comment, council could send the issue to a committee for another report to answer questions like how much revenue could greenlighting marijuana sales really produce.
Ultimately, council would decide whether or not to put the question on the November ballot. An initiative would have to pass by a two-thirds vote.
Los Gatos residents who purchase marijuana products have to travel outside of town to get them, so the town loses that tax revenue.
“So we think about it in terms of retail tax leakage to other places,” Rennie said. “How do we keep people in our town spending money here so we can collect the taxes and provide the services?”
San Jose, Santa Clara, Redwood City and Mountain View all passed local cannabis taxes after it was legalized in the state. Milpitas passed ordinances similar to Los Gatos’ to keep marijuana sales out of the town.
While there may be some pushback from residents, Rennie said he expects any sort of dispensaries would be placed thoughtfully, avoiding sensitive areas like school zones.
The council meeting starts at 7 p.m. on Jan. 18 and will be held on Zoom.
