CITY COUNCIL
MINUTES
Special Meeting
Wednesday, April 20, 2022
2:00 PM
City Council Chambers
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234
This meeting was conducted in person and via Zoom.
• CALL TO ORDER
The meeting was called to order at 2:00 PM by Mayor Ernesto Gutierrez. • ROLL CALL
Attendee Name Title Status Arrived
Ernesto Gutierrez Mayor Present 2:00 PM
Rita Lamb Mayor Pro Tem Present 2:00 PM
Mark Carnevale Councilmember Present 2:00 PM
Nancy Ross Councilmember Present 2:00 PM
Raymond Gregory Councilmember Present 2:00 PM
• AGENDA FINALIZATION
There were no changes to the Agenda.
1. AGENDA ITEMS
A. Cannabis Regulation and Tax Update
Recommendation: This item is presented for information, discussion and direction only.
City Manager Charles McClendon, reported that after the Ja nuary 12, 2022 City Council Meeting a staff working group was formed, consisting of staff involved in cannabis licensing, enforcement and tax collection, who were tasked with the assignment to review in de tail the current ordinances governing the operation of cannabis businesses in the City. He reported that the proposed changes were presented to the Cannabis Task Force on April 11, 2022. He provided a summary of the issues related to the ordinance that w ere identified and related policy questions that ne ed to be addressed. He noted that the Task Force Cathedral City P a g e 2 Printed on 5/05/2022
agreed with the majority of the recommended changes and had robust discussions on just a few of the items. The only item that the Task Force did not necessarily agree with was related to the moratorium on local licensing for dispensaries south of interstate 10. He also presented an overview of the total of all Cannabis Taxes, the retail Cannabis Taxes, what the Coachella Valley Cultivation Tax Rates are, a nd what the Coachella Valley Manufacturing Tax Rates are. He also provided information on the Cultivation Tax structure, Retail Tax structure and the Manufacturing Tax structure.
Anna Gaeta, UFCW Local 1167, encouraged the City Council to leave the requirement to have a Labor Peace Agreement at 10 employees or more.
Maria Scagliotti expressed her support for outdoor consumption lounges. She also stated that she is not in support of lifting the moratorium for new dispensary licenses. She also expresse d her frustration that the City charges a cultivati on tax on square footage even when businesses are not cultivating. She feels that the activity or production of cultivating should be taxed, businesses not producing shouldn't be taxed. She feels that ch anges need to be made to move the industry forward.
Scott Reusczyk, Coachella Valley Cannabis Alliance Network (CVCAN), indicated that a number of concerns they had have been addressed in the report.
He stated that they are in favor of lifting the morato rium on dispensary licenses and requiring backgroun d checks to be in line with the State. He feels that consumption lounges are a good idea, and they support them. He urged the Council to lower taxes for the cannabis industry, he believes that it will bri ng more business to the community.
Rich Eaton than ked the Council for everything that they have done for the cannabis industry. He proposed that the City do a six month trial and lower the tax to 3% - 5%. He stated that if the City does the reduction an d loses money which results in the loss of a police officer, he will pay the salary for that position out of his own pocket.
Tom Lopez, referred to a press release that was put out by the California Department of Cannabis Control where they awarded nearly $100 million in grants to local governments throug h their Local Jurisdiction Assistance Program and encouraged the City to look into grant programs, they may be eligible for in an effort to assist the industry.
Charles Kieley, Co -Founder and CEO Kings Ga rden, indicated that he is a member of the Cannabis Task Force, and they spent a good amount of time discussing the items that are before the City Council. He stated that he is in support and recommends most of what the staff has recommended. He feels that any way the City can align with the State as it relates to licensing will streamline the operations for the businesses and will make it more desirable to operate a business in town. He would like to see a reduction in taxes. If the City does nothing it will likely lose more. He encouraged the Council to think from all perspectives.
Cathedral City P a g e 3 Printed on 5/05/2022
John Chaisson, Owner of Atomic Budz, stated that he does not support lifting the moratorium of dispensary licenses in the City. He feels that pricing is a determining factor and believes if there is a reduction in the tax , the amount of sales will increase. He stated that there has been no assistance for the cannabis industry and expressed how difficult it has been for them. He encouraged the Council to lower the taxes.
Kenneth Churchill expressed his concern with the t ax that the City charges for cannabis. He feels that if the taxes are not lowered the revenue received from the cannabis businesses will diminish. He feels there is going to be a loss one way or another. He believes that Cathedral City is not aligned wi th the other Coachella Valley cities, stating that the City has the highest taxes statewide. He stated that he does not support raising the cap on dispensary licenses. He feels that the City does not care about the issues of the industry.
The City Council recessed at 3:30 p.m.
The City Council reconvened at 3:35 p.m.
After Council discussion, it was the consensus of the City Council to support the recommended changes to the ordinance except for the fol lowing items, which Council would like further info rmation provided to them in order to make a decision:
• Additional follow-up information on Labor Peace Agreements. • Additional Information on Background Checks including the definition of “manager”.
• 5.88.070 Dispensary Operational Requirements - Product not visible to the Public - Work with legal on regulations related to advertisement. • Provide more information related to regulations on outdoor consumption lounges.
• Provide additional language on the definition of Residential Zone. • Provide informa tion to facilitate discussion related to retail and cultivation taxes.
ADJOURN
Mayor Ernesto Gutierrez adjourned the April 20, 2022, Special City Council Meeting at 4:23 p.m.
Mayor, City of Cathedral City City Clerk, City of Cathedral City