DIXON, CA (MPG) - Dixon City Council members considered possible updates to the local cannabis business policies at their Aug. 18 regular meeting. 

As a pilot program, cannabis businesses do not have permanent status under city code. The existing businesses, two retail and one manufacturing, operate under Development Agreements (DA) with the city. City attorney Douglas White said all the current businesses are in good standing and have worked well with the city. 

Current allowable cannabis uses include retail, manufacturing, cultivation, distribution and laboratory, and the city has limits on how many of each type is allowed. 

Signage regulations currently allow the business name and logo along with the hours and contact information. Images displaying cannabis leaves or plants, consumption devices or designs appealing to youth are prohibited. 

The city does not have any specific advertising regulations, so the businesses are subject to the state’s rules regarding display of state license numbers and no images to attract use by minors. 

While the city encourages businesses to have permanent structures, temporary structures are currently allowed under the development agreements. 

Security efforts at the businesses have been successful but the city aims to improve the financial and operational audits, as well as implement stings to identify illegal operations competing with the legal businesses. 

Measure K was passed by voters in 2016, allowing the City Council to impose a business license tax up to 15% of gross sales by cannabis businesses, on top of the current sales tax rate. White said the default tax would be an important enforcement tool against illegal operators, such as delivery services that are not authorized to sell within Dixon. 

The existing businesses are not subject to that 15% default tax, because they have specific public benefit fund rates set by their individual development agreements. The retail operations are required to provide a minimum monthly payment to the city of 5% of gross sales or $30,000, whichever is higher. Those public benefit fees go into the city’s General Fund and support two positions in the fire department and three positions in the police department. 

Additionally, the state recently increased taxes on cannabis businesses, going from 15% up to 19%, which went into effect in July. White said this is impacting local businesses, which are dealing with decreased sales and increased competition from illegal operations. 

The development agreements are expiring, so before new ones are drafted, White asked whether council recommended any changes to the established policies. 

Dixon Wellness CEO Haley Andrew spoke during public comment, stating that her retail cannabis business has always been a good partner to the city and operated with full transparency. In their seven years in business here, Dixon Wellness has contributed nearly $5 million to the General Fund. However, Andrew said, the cannabis industry is facing significant challenges, with increased competition, declining sales revenue and higher state taxes. 

Andrew said that the minimum monthly public benefit payment required by the city cannot be supported by current sales. She requested that their development agreements be updated to reflect current business realities. A lower, more sustainable rate would allow the business to keep their doors open, she said. 

Richard Ferguson also spoke on behalf of Dixon Wellness, explaining that a pound of cannabis could sell for $3,000 to $4,000 when they first opened in 2018. However, now the price per pound has plummeted to $400 to $600.

“As prices have collapsed, so has the stability of our industry” he said.

Cannabis sales are down 60% across the state, so Ferguson requested that the council allow them to conduct deliveries in order to remain competitive and increase sales.  

Many residents spoke in support of Dixon Wellness, echoing the requests to reduce the mandatory monthly payments and allow delivery. 

One resident said that she and many other customers are elderly and in poor health, including some with significant mobility issues, so a delivery option would help support their needs. 

Residents and other local business owners said that the high monthly payments are essentially taxing these businesses out of business. They urged the council to select fair and reasonable levels of taxation. 

Others warned that if these businesses close down, the customers will have to purchase cannabis through the black market, compromising the safety of the users as well as the community at large. 

City Attorney White clarified that the retail cannabis businesses are legally allowed to deliver but they have to meet certain conditions, including having a certain number of vehicles. He added that the current public benefit fee is one of the lowest in the area. And because that collected revenue supports police and fire staff positions, reducing the mandatory minimum would likely impact the city’s budget.  

During council discussion, they reached a consensus to maintain the status as a pilot program, along with continuing all allowable uses and signage and advertising policies with no change. They also agreed to yearly financial and physical audits, a phased approach to requiring permanent structures, and random stings to identify illegal operations. 

The council supported implementing the 15% default tax for any operators doing business in the city without a development agreement, adjusting the requirements to allow for retail delivery, and updating the public benefit fund mandatory monthly minimum payment to either 5% of gross sales or $15,000, whichever is higher. 

Councilmember Kevin Johnson requested retroactive implementation of the change to the public benefit payment, suggesting that it go back to April. He said the development agreements expired months ago and had to be temporarily extended. Johnson said the delay in the city meeting their responsibility to update these agreements should not negatively impact the businesses when they are already struggling financially.

“I think that’s on us,” Johnson said.

The council compromised by agreeing to a retroactive implementation of July 1, 2025, which is the beginning of the current fiscal year. 

Next, council considered a contract with Lionakis for additional design review for the Fire Station 82 Project, which is planned for construction in the southeast corner of Dixon to improve response times to that side of the city. 

Staff requested a budget amendment to cover the cost of the contract, which would not exceed $16,750. 

Johnson said the city has $3.5 million allocated for the fire station project, which was initially expected to cost between $6 million and $7 million. The estimate has increased over the years and is now up to $9.2 million.

“I’m not interested in budgeting any more money,” said Johnson. “I’d rather it come out of the existing funds that are there. … It’s not an unlimited well that we’re going into.” 

Vice-Mayor Thom Bogue didn’t understand why another review of the plans was necessary at this time. 

City Manager Jim Lindley explained, “We’ve taken another look at it and are trying to reduce the footprint a little bit and make it to where it’s more affordable.” 

Councilmember Don Hendershot said there had been too many delays on this project: “We need to get going on this.” 

A resident who lives in that area said it has taken much too long to get the new station built. He said, “This needs to happen.” 

The contract was approved 3-2, with Johnson and Bogue dissenting.

Finally, staff requested approval of a $27,600 budget amendment to hire Probolsky Research to conduct a community survey to determine residents’ priorities as well as satisfaction levels with existing city services.  

Bogue said he wasn’t sure why this needed to be done now, when the city has not yet met all the goals outlined from past surveys. 

Johnson said there “is a lot going on” in the community and priorities can change over time, so it’s important to hear from as many people as possible. 

The contract was approved 4-1, with Bogue dissenting. 

The next Dixon City Council meeting is scheduled for Sept. 2.