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Staff Report
City Council
Item No. 1.B
Meeting Date: January 19, 2022
From: Charles McClendon, City Manager
Title: Report from the Cannabis Task Force Meeting of November 29, 2021
City Council
RECOMMENDATION:
This item is presented for information, discussion and direction only.
BACKGROUND:
The Cannabis Task Force is established by the Municipal Code as follows:
Chapter 2. 32 CANNABIS TASK FORCE
2. 32. 010 Purpose
The purpose of this chapter is to ensure that cannabis businesses in Cathedr al City are conducted in a safe and orderly manner to protect the welfare of medical cannabis patients, primary caregivers, adult users and the community.
2. 32. 020 Creation of Cathedral City cannabis task force established There is created a cannabis t ask force. The task force shall consist of 7 members. The city manager shall be chair of the cannabis task force and shall appoint 6 other qualified members as required by section 2.32.030.
2. 32. 030 Qualification of members.
Three members shall be owners or managers of cannabis businesses located in the city and three members shall be residents of the city.
The members of the Cannabis Task Force are:
Maria Scagliotti – Industry Representative
Charlie Kieley – Industry Representative
Theoden Parker – Industry Representative
Nancy Crandall – Resident Member
James Lawrence – Resident Member
Vacant – Resident Member
Charles McClendon – City Manager
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The Task Force met via zoom in a duly noticed public meeting on Monday November 29, 2021 at 4:00 pm.
DISCUSSION:
The agenda for the meeting included the following:
1. Minutes of the April 28, 2021 meeting
2. Cannabis Tax Update and Discussion
3. Requirement to Obscure Windows in Retail Businesses
On the Tax Update and Discussion, the City Manager provided an overview of the item presented at the City Council Study Session on September 8, 2021 which included a review of the tax rates charged by Cathedral City and the other Coachella Valley cities for the various types of cannabis businesses. The specific discussion at the November 29 Task Force meeting focused primarily on cultivation taxes stemming from a request from a potential large cultivator to consider some type of tax relief. A fairly lengthy discussion followed with a number of ideas surfacing. The task force did not make a specific recommendation to Council instead they asked that a summary of the discussion be provided. Among the ideas discussed by the Task Force were the following:
• Redefining the taxable cultivation area to include only the canopy space. This would give a small break – probably about 10% - to existing as well as future cultivators.
• Developing a maximum square footage upon which to apply the tax. This would give a break to future large cultivators, but all existing cultivators are paying o n their entire area – there is no cap.
• Reduce the overall rate from $15 down to some other amount. This would benefit all growers equally but would reduce revenue to the City. • It was noted that the smallest growers have less opportunity to spread their operating costs and there was some interest in a break for the small operators, including a reverse tier system.
• The tier structure used in Desert Hot Springs and Coachella was also noted as a possible solution for the large operators. The current average square footage among Cathedral City cultivators is about 6,000 square feet. • Delaying charging the tax until the crop is actually moved in. Currently the tax begins at Certificate of Occupancy (COO) and there is normally some down time before the business starts generating revenue. All current operators were assessed beginning at COO.
• Some type of rebate or true up to reflect the actual sale of the product. The current voter approved language requires a per square foot assessment.
The Municipal Code presently contains the following provision relating to the visibility of the interior of cannabis retail businesses:
5.88.070 Dispensary operational requirements.
B. Product Not Visible to Public. The display of cannabis and cannabis products for sale shall not be visible from outside the licensed premises.
The Planning Commission recommended that these provision s be removed, and the interior of the dispens aries should be visible from the outside rather than requiring windows to be dark tinted or covered from within the interior.
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The Task Force discussed the Planning Commission recommendation and advised that staff should determine if there is any provision in state law related to the topic – staff has confirmed there is not . It was noted that allowing vis ibility may allow for more creativity by the owner in designing their store front and that there may be public safety advantages to allowing more visibility.
The City Manager will provide a presentation on the discussion s of the task force. The minutes are attached.
FISCAL IMPACT:
The Cannabis industry paid over $4.5 million in taxes to Cathedral City in calendar year 2020.
ATTACHMENTS:
Cannabis Task Force Meeting Minutes 4-28-2021