Kent could get $350,000 per year from retail marijuana sales taxes

The city of Kent could get an estimated $350,000 per year in sales tax revenue if it allowed three recreational marijuana stores to operate.

Kent has a six-month ban against any recreational marijuana businesses operating in town. The city’s Land Use and Planning Board recommended last month to the City Council that it should continue to keep out retailers, producers and processors.

The council discussed the land use board’s recommendation at a Tuesday workshop where David Galazin, assistant city attorney, revealed the tax revenue estimates.

“If there were three stores of average size operations based on what I can tell from Denver’s experience and stores operating now, roughly speaking, we might be able to get $350,000 just from our retail sales tax,” Galazin said. “These are rough estimate, best guesses, but it’s a point to consider.  I think revenue is an important part of zoning because one thing we want to do with commercial districts is to make sure they are commercially viable and adding to the city’s commercial vitality.”

Galazin said the estimate was based after a week’s worth of several stores selling marijuana in the state, including a Seattle store that sold 11 pounds on one day, as well as Colorado sales where marijuana also is legal. The state Liquor Control Board would allow as many as three retail stores in Kent based on its population.

Councilman Dennis Higgins asked Galazin to clarify the $350,000 amount in sales tax revenue to Kent.

“That’s correct,” Galazin said. “If there were three stores selling 20 pounds a week at the average price of $25 per gram.”

Councilman Jim Berrios voiced concerns about potential revenue numbers.

“I think we’ve got to be careful that we’re throwing numbers out there that people can try to embrace and say, ‘wow we can make all this money,’ when in fact, we still don’t know what surrounding cities (are doing as far as allowing sales). When you have more locations that cannibalizes your potential (sales). We understand there’s potential to making some money but to the degree we don’t know what those numbers could look like.”

Council President Dana Ralph responded that the land-use decision about where to allow recreational marijuana businesses isn’t about just the money.

“The question before us is not how much money do we gain to make but where in this city would be appropriate to have these businesses,” Ralph said. “Yes, there’s a factor there, but there’s a lot of things we could put in place because there is potentially a lot of money there but is not necessarily appropriate for the zoning.”

City planning staff recommended to the land use board to allow processing and production businesses in the M3 general industrial zone of the city in north Kent. As far as retail stores, staff recommended to allow sales only in the gateway commercial zoning district, an area that area runs roughly north of Highway 167 near South 228th Street along 84th Avenue South to about South 208th Street.

The state keeps all of the marijuana 25 percent excise tax revenue of retail and wholesale sales, although cities have lobbied the Legislature to change that and share some of the revenue.

Higgins asked Galazin if he had done any estimates about how much revenue the city might make from its business and occupation tax if it allowed producers and processors to open facilities.

“No, I have not run that,” Galazin said.

The council decided to refer the marijuana zoning decision to its Economic and Community Development Committee to further study the issue, including what neighboring cities allow. Councilman Bill Boyce, chair of the committee, said it would be on an agenda in August or September. The city’s current ban expires in November.

Higgins also asked Galazin to later supply a report about how many hours Galazin and other city staff have spent on the marijuana issue.

“It won’t be small,” Galazin said.