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  Time Set   #   34.    
Board of Supervisors   
Meeting Date: 11/22/2016  
Brief Title:    Medical Marijuana Cultivation Fees
From: Howard Newens, Chief Financial Officer
Staff Contact: Tom Haynes, Chief Budget Official, Department of Financial Services, x8162

Subject
Public hearing to adopt an update to the 2016-17 Master Fee Resolution to establish new fees associated with the cultivation of medical marijuana. (Estimated General Fund revenue $3.2 million) (Newens/Haynes)
Recommended Action
  1. Hold public hearing;
  2. Adopt update to the 2016-17 Master Fee Resolution (Attachment A);
  3. Approve the fees in Exhibit 1 (Attachment B) to the 2016-17 Master Fee Resolution related to the cultivation of medical marijuana.
Strategic Plan Goal(s)
Operational Excellence
Thriving Residents
Safe Communities
Sustainable Environment
 
Reason for Recommended Action/Background
Five new fees are proposed related to Ordinance 16-32, adding Chapter 20 to Title 5 of the Yolo County Code regulating medical marijuana cultivation in the unincorporated areas of Yolo County. Fees are calculated to cover the costs (direct and indirect) associated with implementation of application, permitting, inspection, track and trace, and enforcement efforts related to the ordinance. All pertinent cost elements were considered and cost calculations were based on county staff hours estimated for each activity. Staff will monitor actual cost trends and return to the Board for any necessary adjustments.

1. Application Fee
The application fee proposed is $1,500 and is calculated to cover the costs associated with receiving and processing applications for commercial cultivation permits, including background checks, interagency permit checks, and fee processing and  collection. 

2. Initial Permit Fee
The Initial Permit Fee proposed is $7,600, and is associated with the initial issuance of the commercial cultivation permit. This includes a full initial site inspection, clearance of all aspects of ordinance in terms zoning and site clearance, initial testing of product type (THC or CBD dominant strains of flower), as well as the initial case establishment, inspection documentation, and site inclusion in County GIS. 

3. CBD Dominant Annual Certification Fee
This is an annual cost, per square footage, of fully grown canopy. The proposed fee of $1.60 per square foot is calculated to cover the costs associated with the track and trace program being implemented to monitor product yields. 

4. THC Dominant Annual Certification Fee
This is an annual cost, per square footage, of fully grown canopy. The proposed fee of $2.48 per square foot is calculated to cover the costs associated with the implementation of the track and trace program. Product testing conducted as part of the initial permit fee will determine which dominant strain is being produced for fee classification. THC dominant strains of medical marijuana have a higher "street value" and an increased public safety risk, requiring additional time and resources. 

5. Hourly Enforcement Fee
The proposed Hourly Enforcement fee of $142 is calculated as the cost to inspect non-permitted, non-compliant, and non-responsive sites that do not comply with the Ordinance or Code sections. This hourly fee will be calculated for all hours of effort required until such time as the cultivator begins to comply with the permitting process and submits a completed application with the associated application fee. 
Collaborations (including Board advisory groups and external partner agencies)
Staff in the County Administrator's Office has worked closely with the Department of Financial Services, the County Counsel's Office and the Agriculture Department in the development of these fees. Costs from all relevant county departments have been anticipated.

Fiscal Impact
Fiscal impact (see budgetary detail below)
Fiscal Impact (Expenditure)
Total cost of recommended action:    $   0
Amount budgeted for expenditure:    $  
Additional expenditure authority needed:    $  
On-going commitment (annual cost):    $  
Source of Funds for this Expenditure
Explanation (Expenditure and/or Revenue)
Further explanation as needed:
The proposed marijuana cultivation fees are intended to recover staff time and other costs associated with permit processing, issuance, compliance and enforcement. Based on initial estimates, the proposed fees are projected to generate approximately $3.2 million, as reflected below:
 
Fee Type Quantity Per permit fee Total Revenue by type
Application Fee 40 pending applications $1,500 $60,000
Initial Permit fee 100 permitted operations
20 potential added
$7,600
 
$760,000
$152,000
CBD Dominant Annual 55 @ 10,000 sq. ft. $1.60/sq. ft. $880,000
THC Dominant Annual 55 @ 10,000 sq. ft. $2.48/ sq. ft. $1,364,000
Total Initial Revenue Assumptions $3,216,000

The total revenue generated by these fees, as well as the total associated costs of the program, will ultimately depend on the number of applicants and cultivation permits, square feet of cultivation canopy and number of enforcement actions.
Attachments
Att. A. Master Fee Resolution
Att. B. Proposed Fee Changes

Form Review
Inbox Reviewed By Date
Howard Newens Howard Newens 11/15/2016 04:50 PM
County Counsel Hope Welton 11/15/2016 04:53 PM
Form Started By: Tom Haynes Started On: 11/03/2016 10:07 AM
Final Approval Date: 11/15/2016

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