Economic Impact Analysis: Lompoc California and Santa Barbara County

Purpose:

To demonstrate the financial viability of passing Cannabis friendly legislation and city ordinances within the city of
Lompoc, California; via referencing a “sister city” located in a currently established state with a Medical and Recreational
program.

Current City:
Lompoc, California
County of Santa Barbara
Size: 43,713

Comparison City:
Littleton City, Colorado
County of Arapahoe
Size: 40,717

Comparative Metrics

Littleton City, CO was selected as a base for comparison based off of a couple metrics.

Geographical location to a Major City, Size of city within the County, Tax Rates, Collection Data, having both a Medical
and Recreational Market, Reporting Methods, State Collections Reporting, City and Municipality Comparisons.

Littleton City, CO is located within Arapahoe County. This county is located geographically to Denver, CO. It spans along
HWY 40 and contains 40,717 residents. There are over 20 Listed Cannabis Retailers within Littleton, CO. Littleton is
located 46 minutes from Buckley Airforce Base and 80 Minutes from Fort Carson. Arapahoe has 13 incorporated cities
within its county.

Lompoc, CA is a city within Santa Barbara County with a population of 43,713. This county is located geographically to
Los Angeles. This City splits the major HWY 101. It is located within 10 minutes of Vanderburg Airforce Base. Santa
Barbara has 14 incorporated cities within its county.

Littleton and Lompoc share relative size, geographical locations to major cities, Highways, and Market Sizes.

Advantages

Lompoc has an advantage in the California Cannabis Market of Santa Barbara County by being able to capitalize on
proper taxation rates to revitalize the city. Lompoc is currently the only incorporated city within Santa Barbara County
that has passed Cannabis policies allowing for retail sale. This means that the current surrounding cities and townships
within Santa Barbara County will need to drive into Lompoc to purchase Cannabis at a Brick and Mortar Facility.

Disadvantages

Currently Lompoc has not passed any ordinances specifically outlining taxation amounts for cannabis businesses within
Lompoc. This is a detriment to the city as they have already started accepting applications and will be issuing licenses
soon. This could keep companies away from the Lompoc Market because of the unknown factor when it comes to
taxation.

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Report Generated By: Matthew Dula
Analysis

I would recommend to the city council the following measures to generate revenue, offer transparent spending policies
for revenue generated, and create a competitive environment for Cannabis businesses to stay in Lompoc once other
cities change laws allowing for direct competition with Lompoc.

1. Create a flat rate tax for Cannabis companies ASAP.

2. Create a transparent plan for revenue spending to outline how the city is positively impacted.
3. Investigate creating an incentive program to companies that will invest in infrastructure or development of
identified facilities within the Cannabis zones.
4. Create a Joint Task Force that all cannabis businesses within Lompoc must become a member of that works with
the City, Local Law Enforcement, The Base, and the citizens to provide education and best practices to prevent
underage consumption, DUI/DWI, and possible negative interactions that may occur.
5. Update the Lompoc Website to include more information and user portals for all cannabis businesses.

Assumptions

The state of Colorado breaks down Cannabis Revenue based on County and not by city. This is a hinderance when trying
to forecast what Lompoc could be looking at in terms of Revenue when making an impact study from a “Sister City”. It is
further complicated by all the cities within Arapahoe County allowing Cannabis revenue generation while Santa Barbara
County only has one as of current.

The revenue collected by Lompoc could be higher than average based on the entire revenue from taxation in Santa
Barbara county being funneled into Lompoc. This number also will be affected by whether creates a flat tax rate soon
enough to attract Cannabis businesses.

The chart below shows the combined revenue generated for Arapahoe County at $114,410,242.00 for 2017. Colorado
has a lower overall combined tax rate for Cannabis then California and has been established since 2014.

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Report Generated By: Matthew Dula
Littleton, CO Financials

COMBINED SALES/USE TAX RATE LITTLETON, CO

All # are %
Tax Classification Medical Recreational
State 2.9 0
State Tax on Recreational 0 10
RTD 1 1
Cultural Facilities .10 .10
Arapahoe County .25 .25
Littleton* 3 3
*Indicates Littleton Tax Rate imposed on all Cannabis business.

Arapahoe County Tax Revenue for Fiscal Year 2017

Month Medical Recreational

January $1,137,598 $8,481,055
February $1,330,979 $8,243,087
March $1,334,138 $10,106,784
April $1,171,574 $9,966,130
May $1,171,273 $9,370,054
June $1,033,427 $9,314,356
July $953,749 $9,672,770
August $911,448 $9,187,128
September $868,838 $9,476,898
October $927,716 $9,221,783
November $755,136 $9,034,873
December $881,650 $9,761,509
Total $11,608,688 $102,801,554
*Sourced from Colorado.Gov

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Report Generated By: Matthew Dula
Lompoc, CA Financials

COMBINED SALES/USE TAX RATE Lompoc, CA

All # are % unless specified
Tax Classification Medical Recreational
State Tax Combined 7.5 7.5
State Tax on Cannabis Sales 15 15
Cultivation On Flower* $9.25 Per Ounce $9.25 Per Ounce
Cultivation On Leaves* $2.75 Per Ounce $2.75 Per Ounce
Lompoc BTC* Flat Rate based on Sales Flat Rate Based on Sales
Lompoc Cannabis Tax N/A N/A
Permit Deposit* $11,900.00 $11,900.00
*Cultivation Tax on Flower or leaves are usually passed onto the retail consumer based on a price per ounce base at POS. They are collected by
Distribution Facilities from cultivators but passed on to the consumer via an additional retail tax.
*Indicates Lompoc Tax Rate imposed on all Cannabis business based on city BTC schedule.
*Specific financial requirement for New Cannabis businesses in Lompoc

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Report Generated By: Matthew Dula