Law Firm Files Suit Against City of Sacramento Over Cannabis Fees

Here’s the press release by Garner & Associates LLP…


A lawsuit was filed by Garner & Associates LLP today in the Sacramento County Superior Court on behalf of cannabis related businesses to challenge the City of Sacramento’s Neighborhood Responsibility Plan. The plaintiff, who is representative of an array of cannabis related businesses across Sacramento, has alleged the City exceeded its regulatory authority by imposing an illegal fee equal to 1% of Gross Revenue fee on cannabis businesses and masqueraded this fee as a Neighborhood Responsibility Plan purportedly needed to mitigate alleged negative impacts from “novel business activities.” Plaintiff alleges the fee has little or no relationship to “neighborhood responsibility,” and no relationship to environmental, public health or land use goals.

Plaintiff, through its representatives, alleges cannabis businesses already pay a Business Operations Tax equal to 4% of gross receipts with no cap. This tax generates millions of dollars a year in annual revenue for the City of Sacramento. The Cannabis Business Operations Tax is 100 times higher than that of every other business in the City. Non-cannabis businesses are taxed at .0004% and have taxes capped at $5,000. Plaintiff and the cannabis industry across Sacramento have demonstrated they contribute positively the community by creating jobs, tax revenue and increasing public safety through their robust security efforts. The City of Sacramento’s own study failed to identify a single negative impact from cannabis businesses operating in the City.

Cannabis retailers, cultivators, distributors and manufacturers in Sacramento are required to obtain a Conditional Use Permit (“CUP”) or modify an existing CUP. The Neighborhood Responsibility Plan is a requirement of cannabis businesses but lacks the legally required relationship and/or nexus with the actual impact of the project and, therefore, oversteps the City’s authority to regulate and extract fees under the Mitigation Fee Act.

The plaintiff in this matter is represented by Garner & Associates LLP, a business and litigation firm in Sacramento, CA.