Carnacchi’s cannabis tax proposal renews interest in renovating Ives Park

Michael Carnacchi

PLANS APLENTY — Sebastopol City Councilmember Michael Carnacchi sits in Ives Park with a copy of the 2013 Ives Park Master Plan. He wanted to create a cannabis tax to raise funds to renovate the park, but his fellow councilmembers, for a variety of reasons, shot the plan down.

At the last Sebastopol City Council meeting on Sept. 17, Councilmember Michael Carnacchi introduced a discussion item about putting a cannabis business tax on the March 2020 ballot, with the goal of raising money to renovate Ives Park.

Carnacchi noted that other local cities, like Cloverdale, Cotati and Santa Rosa, had levied taxes on their cannabis businesses as a way of raising revenue for city projects.

He proposed a 2% special tax on cannabis businesses, which, according to the city staff report, would raise around $100,000.

“Ives Park desperately needs work,” Carnacchi said. “It’s in pretty bad shape. The Ives Park Master Plan was developed in 2013, and we’ve accomplished very little toward getting that done,” noting that the city’s current park budget is around $16,500, but that the Master Plan for Ives Park calls for spending $3.7 million.

In discussing his ideas for the cannabis tax, Carnacchi said that the tax should have a sunset clause — meaning it would end when its goal was accomplished — and that it be repeal-able if it proved too onerous for the businesses in question (though who would determine this wasn’t clarified). He suggested that if customers knew that a portion of their money was going toward the renovation of Ives Park, they might be lured out of the less expensive black market and into local dispensaries. Carnacchi also suggested the idea of a cannabis event in Ives Park, the proceeds of which would go to fund the renovations.

He also suggested that the city could take turns taxing different types of businesses, maybe switching off every two years — first cannabis, then wineries and tasting rooms, then restaurants.

Cannabis fights back

Since the idea of taxing wineries and restaurants wasn’t on the agenda, the only industry that turned out in force that night to object to this plan was the cannabis industry.

“As you know, we are taxed heavily at every step of the supply chain,” said Ashley Nelson of the cannabis manufacturing company The Resourcery.  “If we add a tax now, future operators will be discouraged from coming to the city, and existing operators will have a harder time growing and expanding. Right now Sebastopol is a really attractive place to have a cannabis business … Please do not impose further taxes on an already heavily taxed industry.”

Johnny Nolan of the 421 Group, a cannabis consultancy, said, “Cannabis has been viewed as a cash cow. Everyone wants a piece, and at this point it’s starting to feel a little like Alfred Hitchcock’s ‘The Birds’ — everyone’s picking it apart.”

Nolan said that between the state tax of 15%, the high cost of compliance and the inability to deduct operating expenses on federal taxes, “There’s not much left over by the end, at this point.”

“These companies are creating living wage jobs in our communities,” he argued. “These companies are filling vacant buildings in town, and these companies are giving generously to community benefit organizations already because cannabis brings with it a very humanitarian spirit.”

These same points were reiterated by several speakers from the industry, though everyone spoke positively about the idea of renovating the park.

“Nobody here doesn’t like Ives Park,” said Andrew Dobbs-Kramer, of Sparc. “We all want to fund it and make sure it’s a beautiful park … but if a cannabis tax would raise only $100,000 and you still have a $3 million shortfall, maybe cannabis isn’t the place to look to solve this problem.”

While not taking a position on the cannabis tax, Evan Wiig said, “I urge the city council to find some source of revenue (for the park renovation). It’s what we’ve been talking about for years. Thank you, Michael, for coming up with a possible solution and being proactive about it. Let’s come up with something that can work because it’s a beautiful park, and it really is the soul of this community.”

The council weighs in

When it came time for Carnacchi’s fellow councilmembers to comment, they quickly shot down the idea of putting a cannabis tax on the March 2020 ballot — judging it to be too late, too expensive — city staff estimated it would cost $34,000 to put it on the ballot — and unlikely to pass, given the 67% margin required by a special tax —that is, a tax levied to fund a specific project, such as the park renovation. 

Mayor Neysa Hinton said her objection to Carnacchi’s plan didn’t mean that she was opposed to the idea of doing a cannabis tax at a later date.

“I don’t think it’s the right time right now, but I don’t want to rule it out for the future,” she said.

Each councilmember, nonetheless, thanked Carnacchi for rescuing the Ives Park Master Plan from the obscurity in which it had languished since it was passed in 2013.

Patrick Slayter noted that he was one of the authors of the Ives Park Master Plan, and said he wanted to unhitch the park plan from the cannabis tax proposal, in part because the latter simply would not raise enough money — because the park renovations must be done all at once, not incrementally.

“If we’re talking about moving forward on creating funding to improve Ives Park, I’m all for that,” he said, “But as far as doing it on an incremental basis — we can’t do that. As soon as we lift a shovel to do anything in that park, the entire facility needs to meet the Americans with Disabilities Act, so we can’t piecemeal it.”

He also said he thought the true cost of renovating the park was now considerably higher than the $3.7 million listed in the 2013 plan. “Perhaps 50% or 75% higher. Maybe 100% higher.”

The idea of an Ives Park Foundation

In his initial discussion of funding the Ives Park renovation, Carnacchi brought up the idea of creating an Ives Park Foundation, perhaps as a public-private partnership. City Manager and legal counsel Larry McLaughlin cautioned that foundations are private organizations, but said that nothing would prevent the city from working with a privately run foundation to fund renovations for the park.

Several people in the audience, including Jim Corbett (aka Mr. Music) and cannabis consultant Craig Litwin, founder of the 421 Group, offered to be a part of the effort to create a foundation. Both liked Carnacchi’s idea of holding a cannabis event in the park to raise money for renovations.

A week after the council meeting, Carnacchi said he was pleased that people were interested in renovating Ives Park, but frustrated that everyone rejected his financial proposal for doing so.

“In the end, it was disappointing because the cannabis tax would have provided a mechanism by which the monies collected could have been leveraged in a matching grant program, whereby the proposed Ives Park Foundation would be incentivized to organize and raise funds that would have been matched by the city,” Carnacchi said.

“Instead we are left with an Ives Park Master Plan that will require an estimated $5 million to implement and with only $16,452 in the city’s park fund,” he said. “Unfortunately without financial resources, good intentions, no matter how well-meaning, oftentimes end up with nothing.”

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