Chris Brown, former mayor of the South Bay community of Hawthorne, plays matchmaker between small cities looking for new tax revenue and cannabis companies that want to do business there.
With recreational marijuana legalization looming on next Tuesday’s ballot, those opportunities are about to increase significantly.
If recreational legalization passes as expected, taxes from pot production and sales could top $1 billion annually. Cities and counties can add their own fees and taxes for business licenses, permits and other business activities to California’s state taxes, and that’s where Dr. Brown, Chief Political Officer of the legal group he works for, The Foxx Firm, comes in.
Adelanto, in Northern California, is Dr. Brown’s favorite example of the benefits of partnership between local governments and cannabis companies.
The city of 32,000 residents with a 12 percent unemployment rate, was nearly bankrupt in 2014 when local businessman John Woodard Jr. ran for City Council “on the M-word.”
The M-word was marijuana. Mr. Woodward proposed the city welcome medical marijuana businesses as tax payers and employers. “I saw other cities paying for police, firefighters and city parks with cannabis taxes,” he said.
Mr. Woodward won a seat on the Council, and the city worked with Dr. Brown’s firm to write ordinances that would allow marijuana companies to operate and be charged for background checks, commercial use permits and licenses.
Now with more than 30 business licenses granted and a million square feet of cultivation and manufacturing in operation, the city believes they are on track to bring in $10M per year in taxes, a significant number when the city budget is about $12M. The regulations even stipulate that a certain percentage of employees had to be city residents.
Cannabis companies are eager to grow, process, sell and deliver their products in California cities but “a lot of local governments have a lot of red tape to go through to get business done,” said Dr. Brown.
As a former elected official, he can explain the process and help businesses work as efficiently and effectively as possible with local governments he said. “I understand exactly how frustrating it can be waiting on a city to pass an ordinance.”
Dr. Brown is betting on the success of the industry. When it comes to compensation from a company for helping it to be able to operate in a new city, he prefers to receive a small percentage of the business rather than a paycheck.
Working with GreenPoint Group L.L.C., owned by Hab Haddad to bring some cultivation companies to Southern California, for example, Dr. Brown will receive a cut of the business rather than a fee.
In a partnership with AJ Gentile, co-owner of the Speed Weed delivery service, he will get 8 percent of the revenue Speed Weed earns from each town he helps the company enter.
The time is now to “start licensing businesses,” he said, for local governments, marijuana companies and his own firm.
This story originally appeared at www.forbes.com.
Ms. Weed wrote the best-selling All I Really Need to Know in Business I Learned at Microsoft. Follow her on Twitter @julie_weed and at www.julieweed.net
