Addicted? – How Costa Mesa will spend a projected $2.5 million in cannabis tax revenue

Costa Mesa leaders are factoring in a new revenue stream as they plan the next city budget: Taxes on the sale of cannabis.

The city’s first retail pot shops are expected to open in the coming months, and in the budget the City Council will vote on next month, $2.5 million in revenue from a 7% local tax on their business is being projected.

And as more shops are approved, that revenue is expected to grow over time – Santa Ana, the first city in Orange County to allow retail sales is this year expecting to generate $18 million in revenue.

Costa Mesa leaders already have plans for how a portion of the money will be spent: 1% will be split evenly between a program to help first-time homebuyers in the city and a citywide plan to boost arts and culture. The other 6% of the cannabis tax will go into the city’s general fund, which pays for police, parks, street paving and other day-to-day operations.

The City Council decided last year to fund the arts (“City of the Arts” has been its motto since 1984) and the homebuyer program as a way to show residents a return on Measure Q, the 2020 ballot proposal that authorized retail cannabis shops, Mayor John Stephens said.

“The voters voted for this, and in part they voted for it because of the revenue,” he said. “Both these programs are a way to point back and say the community is directly benefiting from this new revenue in a very tangible way.”

It’s not yet clear how many people hoping to buy homes in town will benefit from the funding, but Stephens said it’s intended for those who grew up in the city and want to move back, or who already live in Costa Mesa and want to put down roots.

The arts portion of the cannabis revenue will pay for initiatives in the city’s master plan for arts and culture, which was created several years ago with input from arts organizations and residents. The city’s first-ever arts coordinator, who was recently hired, will help bring the plan to fruition.

Goals of the plan include creating more arts-related opportunities for youth, giving residents more access to arts and culture throughout the city, adding more public art, and supporting arts and cultural businesses and organizations in Costa Mesa.

The new fiscal year will be the second year of the five-year master plan, with new initiatives set to launch such as an “art crawl” event, free tickets to performances at the Segerstrom Center campus for city residents, installation of several large-scale temporary public artworks, creation of an “artist laureate” position, and offering more free public concerts and performances at city parks.

Stephens said the arts plan will help make the city a more beautiful place, but he believes the coming cannabis shops also will improve the aesthetics of some commercial corridors by bringing new investment. For example, one proposed business waiting for approval would go into a storefront that’s now sitting vacant and fenced off.

The City Council will hold a hearing on the proposed 2022-23 budget June 7.

Positive Drug Tests Among U.S. Workers Hit Two-Decade High – And while it can still be tough to fill open roles, Link Staffing and the employers it works with still view marijuana use as a deal breaker.

Fewer employers tested applicants for marijuana last year than in 2020 as companies grappled with nationwide labor shortages

The percentage of working Americans testing positive for drugs hit a two-decade high last year, driven by an increase in positive marijuana tests, as businesses might have loosened screening policies amid nationwide labor shortages.

Of the more than six million general workforce urine tests that Quest Diagnostics Inc., one of the country’s largest drug-testing laboratories, screened for marijuana last year, 3.9% came back positive, an increase of more than 8% from 2020, according to Quest’s annual drug-testing index.

That figure is up 50% since 2017. Since then, the number of states that legalized marijuana for recreational use grew to 18 from eight, plus the District of Columbia.

Despite the increase in positivity last year, fewer companies tested their employees for THC, the substance in marijuana primarily responsible for its effects, than in recent years, said Barry Sample, Quest’s senior science consultant.

The shifting legal backdrop and changing cultural attitudes have prompted some employers to stop testing for marijuana while companies in some states are barred from factoring the test results into hiring decisions, according to Dr. Sample. And those trends accelerated last year amid the recent shortage of workers, especially in states where recreational marijuana is legal, Dr. Sample added.

“We’ve been seeing year-over-year declines in those recreational-use states, but by far the largest drop we’ve ever seen was in 2021,” he said about the number of drug tests that screened for THC.

Cannabis companies in the U.S. lack access to banking and other financial services because the drug is federally illegal. That could change through new legislation or thanks to broader legalization efforts backed by the Democratically-controlled Senate. Photo Illustration: Laura Kammermann
The percentage of specimens tested for THC declined 6.7% nationwide in 2021 from 2020, while that figure fell by 10.3% in states where recreational marijuana is legal, according to Quest’s data.

“We certainly heard from some of our employer customers that they were having difficulty finding qualified workers to pass the drug test,” Dr. Sample said of pre-employment tests for THC, especially in states where use of the drug is legal.

Overall, the proportion of U.S. workers who tested positive for the various drugs Quest screened for in 2021 rose to 4.6%, the highest level since 2001, according to Quest, which analyzed nearly nine million overall urine tests last year on behalf of employers.

That percentage is more than 31% higher than the low of 3.5% a decade ago, in the early days of a resurgent heroin epidemic in the U.S.

In Michigan, where recreational marijuana was legalized in 2018, many employers didn’t loosen their requirements on pre-employment drug tests for a few years, according to Tammy Turner, co-owner of Kapstone Employment Services, a Detroit-based staffing agency.

But during the pandemic and the related labor shortages, Kapstone, which works mostly with manufacturers that supply the Big Three car makers, encouraged regional employers to loosen their THC-screening policies for many positions.

“So many of our clients were adamant, in pre-Covid, that they would not accept anyone that could not pass a drug test, even if it was THC,” Ms. Turner said. “We had to encourage some of them to reassess their policy, and they did, and we were able to fill many of those jobs as a result.”

For certain positions, such as those that involve heavy machinery, Kapstone still screens applicants for THC and other drugs, as required by the federal government, said Kerry Buffington, co-owner of the company.

Ms. Buffington and Ms. Turner said they don’t see any of the companies they work with reverting to their pre-pandemic hiring standards even if the labor shortage eases.

Marijuana use has become so casual among some young workers that Ms. Turner said some potential workers have shown up to her office smelling like the drug, and one worker who was placed by Kapstone got fired after using a vape pen in the workplace. The firm has had to counsel some workers on what is appropriate at work, Ms. Turner added.

In the hospitality industry, many employers had already stopped screening potential employees for drugs, including marijuana, before the pandemic, according to one representative for a hotel management company with operations across the country, including in Georgia, Minnesota and Colorado.

The representative said their company along with several of their industry peers stopped conducting pre-employment drug tests in the past five years because of the associated expenses and evolving legal landscape.

Chris Layden, senior vice president at staffing firm ManpowerGroup, said the elimination of marijuana screening is one of the most common ways companies are seeking to expand their pool of eligible workers. ManpowerGroup estimated that drug testing eliminates about 5% of candidates.

ManpowerGroup is seeing companies across nearly all industries, except for financial services and federally regulated businesses, eliminate marijuana testing requirements, Mr. Layden said.

Michelle Bearden, chief risk and operating officer for Houston-based staffing and recruiting firm Link Staffing Services Inc., said she has yet to see a strong reason why Link Staffing should move to loosen pre-employment marijuana screenings before the federal government does. She acknowledged the job market has been tight during the pandemic, but said she doesn’t think nixing THC screenings is a good solution.

“[Marijuana] is still on the federal list of prohibited substances, and that is what our policies are driven by at this point,” she said. “If I see that there is an overwhelming reason or cause for us to change ahead of that, we will.”

In Texas, Link Staffing, which mostly hires for the manufacturing and distribution sectors in the Dallas and Houston areas, has made some concessions to fill open roles amid the labor shortage, including by easing background-check requirements, Ms. Bearden said.

And while it can still be tough to fill open roles, Link Staffing and the employers it works with still view marijuana use as a deal breaker.

“We employ people in safety-sensitive jobs, and I think your employers that operate workplaces with high safety concerns—it may still be part of what they view as a hazard in the workplace, for people to be under the influence of anything,” Ms. Bearden said.

Write to Will Feuer at [email protected]

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Appeared in the March 30, 2022, print edition as ‘Positive Drug Tests Hit Two-Decade High.’

https://www.wsj.com/articles/positive-drug-tests-among-u-s-workers-hit-two-decade-high-11648603800

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