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Item 3.
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| City Council Regular | |
| Date: | 12/20/2021 |
| Title: | Public Hearing & Resolution Marijuana Business License Fees |
| Presented by: | Andy Zoeller, Finance Director |
| Department: | Finance |
| Presentation: | Yes |
RECOMMENDATION
Staff recommends City Council adopt the attached resolution establishing business license fees for marijuana related businesses
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
On November 22, 2021, City Council approved the 3rd reading regulating the marijuana businesses. These regulations of marijuana industries will require additional resources within Business Licensure, Code Enforcement, and Fire Inspection. The goal in determining an appropriate license fee is to set it such that the additional costs associated with regulating marijuana businesses is recouped by the license fee for those businesses.
On December 6, 2021, City Council held a work session where staff presented information on proposed license fees for regulating marijuana businesses in Billings. Based upon the discussion that occurred at the 12/6/21 work session, staff reconvened the marijuana subcommittee to examine the license fees in greater detail.
The committee met on December 7, 2021, to discuss the Marijuana License Fees to be proposed to City Council. The committee consisted of CM's Neese, Ronning, Boyette, Shaw, and Mayor Cole and staff members, Andy Zoeller, Gina Dahl, Wyeth Friday, and Karen Tracy. First, an adjustment to total cost was made to include estimated costs for Legal and Administrative review, and a reduction to the estimated lottery costs was also made. After these changes, total annual expenses expected to be incurred by the City are estimated to be $70,970. The committee reviewed the estimated number of businesses, and compared it to a few other communities around the U.S. and felt that an estimated 18 total marijuana businesses within the City limits was a reasonable assumption. Additionally, as the committee tried to parse out what businesses may be located within each business segment, the likelihood of being correct diminishes significantly.
For these reasons, along with direction from City Council at the 12-6-21 work session, the committee is recommending the following fee structure:
On December 6, 2021, City Council held a work session where staff presented information on proposed license fees for regulating marijuana businesses in Billings. Based upon the discussion that occurred at the 12/6/21 work session, staff reconvened the marijuana subcommittee to examine the license fees in greater detail.
The committee met on December 7, 2021, to discuss the Marijuana License Fees to be proposed to City Council. The committee consisted of CM's Neese, Ronning, Boyette, Shaw, and Mayor Cole and staff members, Andy Zoeller, Gina Dahl, Wyeth Friday, and Karen Tracy. First, an adjustment to total cost was made to include estimated costs for Legal and Administrative review, and a reduction to the estimated lottery costs was also made. After these changes, total annual expenses expected to be incurred by the City are estimated to be $70,970. The committee reviewed the estimated number of businesses, and compared it to a few other communities around the U.S. and felt that an estimated 18 total marijuana businesses within the City limits was a reasonable assumption. Additionally, as the committee tried to parse out what businesses may be located within each business segment, the likelihood of being correct diminishes significantly.
For these reasons, along with direction from City Council at the 12-6-21 work session, the committee is recommending the following fee structure:
| Annual License Type | Fee Amount |
| Initial Application Fee | $350 |
| Medical Dispensary | $3,950 |
| Cultivation | $3,950 |
| Transporter (with local warehousing) | $3,950 |
| Manufacturing | $3,950 |
| Testing Laboratory | $3,950 |
| Limited Transport Only (no local storage or warehousing) | $55 |
ALTERNATIVES
City Council may:
- Approve; or,
- Not Approve the resolution adopting fees. If Council does not approve the resolution, fees will default to $55/year, which is the basic business license tax for all businesses in Billings.
FISCAL EFFECTS
The estimated costs of regulating marijuana businesses for FY23 is $70,970. Staff is recommending that fees for marijuana businesses be set such that these costs are covered by the license fees. The proposed annual license fee for a marijuana business in Billings is $3,950. An initial application fee of $350 is required upon application submission, which will be created towards the total annual fee once the license is issued. It is estimated that the total revenue collected from this fee structure will be $71,100, which will be deposited into the General Fund to cover the costs associated with application review and code enforcement.