City Manager Charles McClendon provided an overview of the changes that will be proposed in an amended Ordinance that will be presented to the City Council at a later date. These changes were based upon discussion at the Special City Council Meeting of April 20, 2022. City Manager McClendon also provided information on the following items, which was also requested by the City Council at their Special City Council Meeting of April 20, 2022:
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.
The following members of the public provided public comment on the items listed above:
Kenneth Churchill suggested that each business that would like to have an outdoor lounge bring forward their plan and allow the Planning Commission to review and approve/disapprove on a case-by-case basis. He expressed his concern with allowing only specific zones to allow outdoor lounges. Those businesses in those zones may not be interested in having an outdoor lounge.
Maria Scagliotti feels that the Council should allow for outdoor lounges in the industrial zoned areas because it would be less impactful there. She does not support allowing lounges on a temporary basis because of the costs that will go into building the outdoor area.
Rich Eaton stated that he agrees with Mr. Churchill that the lounges should be allowed and considered on a case-by-case basis reviewed by the Planning Commission. He stated that marijuana odor does not travel, the odor problem comes from the cultivators.
He feels that they should be given a chance.
Armondo Roarty expressed his support for outdoor lounges and agrees with Mr. Eton and Mr. Churchill on the process.
Councilmember Mark Carnevale stated that he feels that the City should allow any business that has a dispensary license the ability to have an outdoor lounge if they desire to. He feels that it is unfair to limit it to certain areas.
Councilmember Gregory is supportive of allowing outdoor lounges as long as specific guidelines are put in place to ensure that the Planning Commission has guidelines to follow when reviewing the project. He would support allowing them in the industrial area on a trial basis in an effort to move forward with outdoor lounges in a prudent way.
Councilmember Nancy Ross concurs with Councilmember Gregory.
Mayor Ernesto Gutierrez feels that all of the dispensaries should be allowed to have an outdoor lounge if that is their desire, however, there needs to be guidelines in place that will ensure odor control. He feels that the Planning Commission should be the reviewing body providing a recommendation to the City Council with Council being the approving body.
Mayor Pro Tem Rita Lamb feels that limiting the outdoor lounges in certain zones is the best way to proceed. She wants to encourage the businesses to be as successful as possible and she would like to move forward with baby steps.
After discussion by the City Council, staff was given direction to move forward with the code amendments as recommended with the exception of outdoor lounges. They would like staff to develop language to bring back to Council on regulations related to outdoor consumption lounges in particular to odor control.
City Manager Charles McClendon provided an overview of Cannabis Taxes and Fees and provided information on what other agencies in the region are charging.
The following members of the public provided public comment on Cannabis Taxes and fees:
Maria Scagliotti expressed her frustration with the City charging her taxes on cultivating when she is not cultivating. She feels that businesses that have a cultivation license should only have to pay the taxes if they are cultivating cannabis. She urged the Council to stop wrongly taxing her.
Armondo Roarty feels that the high tax rates are an issue all across the State of California. He believes that the high taxes are creating a rise in the black market. He would like to see a study done in the City to see if individuals are consuming legal or illegal cannabis.
Rich Eaton indicated that there are other cities that have no retail taxes and that is where people will go to purchase their cannabis and then there will be no cannabis in the City of Cathedral City.
Matthew Sigurdson believes that lowering the tax will bring more people to the City and will increase the revenue.
Kenneth Churchill believes that if the City does not lower the taxes for retail businesses in Cathedral City it will force those retailers to close. He feels the City is not doing anything to help the dispensaries to be successful. He encouraged the City to do something.
Speaker, urged the Council to review the per piece manufacturing tax, he indicated that in large volumes it can be quite high making it tough to do business in Cathedral City.
Councilmember Mark Carnevale expressed support for offering some type of assistance to the cannabis industry.
Councilmember Ross feels that the City is doing a disservice to businesses by making them pay taxes for something they don’t use. She suggested some type of pause that a business could take by paying a small fee for a few months. She feels we shouldn’t run people out of business by taxing too much and what she sees as unfair taxation. She would like to see if there would be an increase in revenue if the taxes were lowered.
Councilmember Raymond Gregory indicated that he may be supportive of allowing a pause of collecting taxes for a period of time between the approval of CUP and growing.
He also would support having the Cannabis Task Force look into the per piece tax for manufacturing as mentioned by the gentlemen who provided public comment. He also is supportive of only taxing the canopy space or have language included in the code that allows for tax exempt areas that are not used for cultivation. He does not support lowering retail taxes for the cannabis businesses at this time.
Mayor Ernesto Gutierrez indicated that the City relies on the taxes that they receive from the cannabis industry. There are several positions that were hired based on that revenue and he feels that if we are going to lower the taxes for the industry then Council needs to decide which positions would be eliminated as a result. He would support a pause of 30 to 60 days for those cultivating businesses that may want to sell their business to accommodate that sale. He does not support lowering the taxes for the industry at this time.
Mayor Pro Tem Rita Lamb stated that she supports limiting the taxes for cultivators to the canopy space. She supports having a pause of when taxes are due between when the CUP is issued and cultivating begins. She does not support lowering the retail taxes at this time.
After discussion of the City Council, the following direction was given to staff:
Develop language in the definition of the code under cultivation that will allow tax exempt areas that aren’t used for cultivation.
Meet with the Cannabis Tax Force to discuss the manufacturing tax related to the per piece charge under manufacturing taxes.
Allow a phase in period for new cultivation licenses.
Allow for a pause for some businesses not to pay their cultivating tax when they have a license to cultivate but are not cultivating for a period of 30 to 60 days.
There is no support for changing the retail tax at this time.