Santa Ana cannabis shop policies hailed for spurring community investment, but questions remain

Several years ago, Santa Ana came up with the idea of ​​pumping money into some of its most underfunded — and neglected — quality of life areas by capitalizing on a product some in town didn’t support. , but still existed in the community anyway: recreational marijuana.

In 2018, officials asked voters to decide whether commercial cannabis should be allowed, placing Measure Y on the ballot. Their answer was “Yes,” and now City Hall licenses, regulates, and taxes legal cannabis stores operating in the city.

That same year, the city established a “public benefit fund” through which all new annual cannabis tax revenue would be directed to libraries, park improvements, and youth services.

Since that policy change, a public safety stigma drug has essentially given the city an edge in closing funding gaps in historically underfunded priorities, and even earned praise from the Orange County grand jury. in a new report on June 3.

The grand jurors noted “there has been no apparent increase in criminal activity in areas surrounding adult cannabis retail dispensaries.”

But questions remain. Namely, much of this money from the Cannabis Public Interest Fund is also spent on “enforcement” activities by code enforcement and the police department for what are supposed to be efforts to combat the city’s illegal and unlicensed dispensaries.

The grand jurors in their report noted that the city’s spending on enforcement is not that transparent.

“The OCGJ (Orange County Grand Jury) has learned that there is no clearly identifiable accounting for residents to see how this money is being spent,” the report said, adding later that it “has been difficult to obtain specific information on how the money for application services has already been used.”

The grand jurors in their report claim that “there is no real and viable oversight regarding the disbursement and use of cannabis money received.”

“Interviews with city staff indicated that various departments rely on Measure Y funds for their enforcement efforts… The OCGJ has not received a clear breakdown of how the money from the application services has been used by various city agencies,” the report said.

Voice of OC asked the town hall about these transparency problems.

While city spokesman Paul Eakins said the city has 90 days from the release of the grand jury report to legally respond in court, he provided a breakdown of the charges in an email. revenues and expenditures for recent budget years from the Cannabis Public Interest Fund.

In the current fiscal year, for example, the city is estimated to spend $9.6 million on youth services and libraries, while spending $3.4 million on law enforcement and administrative costs. In this application area, the city’s spreadsheet breaks down which departments that money was split between:

  • $987,350 for the City Attorney’s Office for attorneys’ time and court records related to the enforcement of cannabis trade laws.
  • $354,030 for the Finance and Management Services Agency, whose expenses are largely for the collection and audit of the business cannabis tax.
  • $645,789 for the Planning and Building Agency, whose expenses are largely for code enforcement.
  • $1,425,980 for the police department, the expenses of which are for law enforcement activities.

Officials like City Council member David Penaloza wonder if these city departments could absorb valuable cannabis sales tax revenue that could be directed more towards youth programs, parks and libraries.

“At the time (the measure was passed), we had hundreds of illegal dispensaries that needed to be tackled,” Penaloza said in a June 3 interview. “Is it still necessary to have so much money to go to the application?”

Mayor Vicente Sarmiento agreed, recalling recent remarks he made during a budget hearing this month recommending that the city review its spending to enforce those cannabis dollars.

“There could be a shift and adjustment of funds where we could reduce the enforcement side – not get rid of it, but reduce it and move it more to youth programs,” he said. declared. “What we originally projected into this cannabis fund is probably half of what’s in there right now.”

Over the past two years, the city’s total revenue from the commercial cannabis tax has exceeded $20 million.

“Nobody knew how fast the revenue was going to grow,” Sarmiento said.

Before Santa Ana legalized commercial cannabis shops, recreational marijuana was already legalized across California in 2016. Additionally, the city was already allowing and taxing the sale of medical marijuana — money that went straight in the coffers of the city.

On top of that, commercial cannabis stores were still operating illegally in town at that time.

During the coronavirus pandemic, cannabis trade taxes remained a steady stream of revenue for the city at a time when few others did.

And while other cities have begun to explore the idea through measures such as allowing cannabis distribution and countywide labs, no other city has come as far as Santa Ana.

“Santa Ana remained the only city in Orange County to issue commercial licenses and regulate the retail sale of cannabis for adult use for the years 2018, 2019 and 2020,” the grand jurors wrote in their report.

“The town was seen as the county’s black sheep allowing cannabis retail,” Penaloza said.

“It’s a stream we didn’t expect to do as well as it did and it tripled. All in all, I’m grateful we have it.

Still, he cautioned against cannabis money becoming a fiscal crutch to fill the city’s gaps in historically under-priority spending areas: “I don’t want staff to be heavily reliant on cannabis to fund youth services.

Brandon Pho is a staff writer for Voice of OC and a body member of Report for America, an initiative of GroundTruth. Contact him at [email protected] or on Twitter @photherecord.

Jill E. Washington