The council will have to approve the language and the rates of the proposed tax measure and the tax rate will depend based on the type of marijuana business.
Ultimately, the money from the proposed tax rate would go to police and fire departments.
"We'll have an oversight committee to make sure the money is spent appropriately. It will be in a separate fund when its generates, so it's got a lot of protections to make sure it goes to the specific purposes," said Merced Development Director Scott McBride.
The proposed tax measure is expected to be on the June 5th ballot.