This November, voters across Sacramento County will decide if the county should tax cannabis and hemp businesses if they are allowed to operate in unincorporated communities.

Sacramento County supervisors on July 26 voted 3-2 to advance the tax measure to the November ballot. This measure alone does not permit cannabis businesses to operate in unincorporated communities. That legalization requires  a separate  board of supervisors action.

Supervisors reviewed an altered version of the proposed cannabis tax measure that failed to pass during their board’s July 12 meeting. Supervisor Phil Serna, who is a leading proponent of the commercial cannabis tax, revised the measure to improve its chances of advancing to the November ballot.

This time, the new tax measure will dedicate its tax revenues to a special fund that will solely fund homeless assistance programs. Serna considers homelessness to be the “number one issue at the forefront of every single day” in the county.

“Will this cure homelessness? Absolutely not. I will be the first to admit that,” he told his colleagues. “The way I envision it is adding a tool to our toolbox to do what’s expected of us.”

Such a measure for a special tax fund requires at least three supervisor votes to qualify for a November ballot placement. The previous tax measure that failed on July 12 would’ve instead sent cannabis tax revenues to the county’s general fund. That measure required four votes to pass.

Supervisors Sue Frost and Don Nottoli still opposed placing the cannabis tax measure on the ballot.

Frost insisted that it’s unfair to have a ballot vote where voters in cites would vote on a measure that only impacts unincorporated communities. As the District 4 supervisor, she represents unincorporated places such as Rancho Murieta, Herald, and Antelope. Frost said that a common theme in hearing from her constituents was that the ballot vote is unfair.

“I don’t think it’s fair for the unincorporated residents - for the whole county to vote on an issue that could potentially have a dramatic impact on our community, and we already have a drug problem,” she said.

Frost also expressed uncertainty about the plan to use cannabis tax revenues to fund services for the homeless.

“At the end of the day, I’m not sure that bringing recreational cannabis to the unincorporated county is worth the money,” she said. “I’m not sure how many lives that it will impact, and how it will impact an already hugely exacerbated problem of homelessness.”

Nottoli in his annual State of the County address that he delivered in Elk Grove on July 29 reiterated his opposition to the cannabis tax measure. He stressed that it’s due to voters in cities having the ability to vote on the measure. 

“So, you folks in Elk Grove, in the city, get a chance to vote on it. The same thing in the city of Sacramento, they get a chance to vote on it, and yet the regulatory scheme with the taxing, as well as the activities, will be only in the unincorporated area,” the supervisor said. “That’s one of the reasons I didn’t support it.”

Nottoli represents south county communities such as Elk Grove, Wilton, and Galt in District 5.

 Commercial cannabis retail and cultivation are illegal within Elk Grove’s city limits. However, the city borders several unincorporated communities such as Wilton, Franklin, Vineyard, and Vintage Park.

In Sacramento County, cannabis businesses are only allowed to operate in the cities of Sacramento and Isleton.

More than 300 licensed cannabis businesses operate in the city of Sacramento, according to a report that the HdL Companies firm prepared for the county supervisors.  They reported that the city collected more than $20 million in cannabis taxes during the 2020-21 fiscal year. Such businesses pay a 4% tax rate to the city.

The HdL staff estimated that the county could generate between $5 million to $8 million annually from licensed cannabis businesses in unincorporated areas.

During the county supervisors’ July 12 meeting, Supervisor Rich Desmond noted that the city of Sacramento now collects the bulk of cannabis tax revenues in the county. He added that cannabis products are still widely sold in unincorporated areas.

“We’re not only leaving money on the table, but we’re also leaving another municipality to make all of the decisions about how the tax money is spent for something that’s occurring with the unincorporated county, and I have a big problem with that,” Desmond said.

After the original cannabis tax measure failed to advance on July 12, Serna returned with a revised measure to exclusively fund services for the homeless.

“I think this measure, the way it is crafted, could bode well with this county - for some of the most vulnerable people who are today camping on the edge of the rivers, or sleeping under overpasses…feeling like their only opportunity is living outdoors and be very susceptible to adverse impacts on their mental health and who oftentimes, unfortunately self-medicate,” he said at the July 26 board meeting.

A few members of medical cannabis and land conservation organizations told supervisors they support the new measure.

Dianna Poggetto, the executive director of the American River Parkway Foundation, spoke of homelessness at the parkway.

“As we all know, the parkway is ground zero for the homeless, so additional resources that can be brought to the county to address homelessness, in particular to the parkway, would be greatly appreciated,” she said.

Richard Miller, the Sacramento chair of Americans for Safe Access, which advocates legal access to cannabis for medicinal use, told the supervisors about his experience of being homeless.

“I know how difficult it is to get out of that situation,” he said. “Most individuals cannot, and after being on the streets for a week, you develop mental issues, and so I think it’s very important that we move forward and take this into consideration.”

Before he cast his vote in support of the new tax measure, Supervisor Patrick Kennedy rejected the notion that the cannabis tax revenues should only fund services for the homeless in unincorporated areas.

“We always talk about the fact that homelessness is a crisis and then we treat it as another government program,” he said. “This (tax measure) shows that we are thinking outside the proverbial box in providing services. Sure, it is not the panacea, and it will not solve homelessness, but we cannot leave any stone unturned to look for resources to deal with what is truly a humanitarian, urgent crisis.”

Staff Writer Lance Armstrong contributed to this story.