I. RECOMMENDATION:
Assistant City Manager and Financial Services Director recommend City Council adopt Resolution No. 4043 establishing new administrative and licensing fees for Cannabis Operations and accepting the Cannabis Fee Study Report prepared by SCI Consulting.
II. BACKGROUND:
The last Cannabis fee study prepared by the City was conducted in 2016. Costs of providing services have changed over that time and other updates are necessary. The consulting firm SCI Consulting, Inc. was retained to update this information. SCI is a firm with extensive experience in conducting detailed cost of services studies of Cannabis activities. Their focus on this update was to determine the full cost of providing specific cannabis services and recommend an appropriate level of fee based on policy, legal and market considerations.
A public hearing is required for revision to Cannabis Operations Fees. Interested parties were noticed by mail.
III. DISCUSSION:
A fee is a charge imposed on a business for a service that the business chooses to receive. A fee may not exceed the estimated reasonable cost of providing the service or facility for which the fee is charged, plus overhead.
As mentioned, SCI was retained to perform this service cost study. The intent of the study was to determine the following in regard to those services:
1. What does it cost the City to provide these services?
2. What fee changes are necessary to achieve the City’s policies on cost recovery?
The primary purpose of this review is to identify the costs of providing service to requesting organizations to fairly and equitably set fees for those specific services. Th goal is to neither make a profit on nay service, nor unintentionally subsidize any fee-oriented area. A service qualifies for the “fee” designation when the activity benefits a specific individual or group, as opposed to the public at large.
It is generally accepted that recovery of costs should be in direct proportion to the individual/specific gain for services received.
SCI developed a cost model based on “full cost,” which includes direct and indirect costs, including support costs from other departments. Direct costs include salaries and benefits attributed to each service.
The attached fee structure identifies all fees the city must charge in order to recover costs associated with its cannabis program. The major change in this plan is the consolidation of the licensing fees for cannabis operators. Staff found that similar time is being used for all operations except for cultivation facilities that can be scaled. Therefore, all licensing fees are the same except for a nominal scaling fee for cultivation. If someone has multiple licenses, they will be charged the fee per license. Microbusinesses will be charged at the single rate since they do not have to be separate and distinct entities.
In addition to the consolidation of licensing fees, staff provided a fee structure for licenses that includes the services of SCI for inspections and reporting in the Council finds it necessary to maintain their services. The City fee includes the City’s time to conduct quarterly inspections and reporting.
IV. ALTERNATIVES:
Not to approve the resolution.
V. FISCAL IMPACT:
Revenues generated from the proposed fees are unable to be determine at this time due to the unknown variable of the volume of these services to be provided in the current fiscal year and upcoming years. |