CITY COUNCIL
MINUTES
Study Session
Wednesday, May 11, 2022
3:00 PM
City Council Chambers
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234
This meeting was held in person and via Zoom.
• CALL TO ORDER
The meeting was called to order at 3:00 PM by Mayor Ernesto Gutierrez. • ROLL CALL
Attendee Name Title Status Arrived
Ernesto Gutierrez Mayor Present 3:00 PM
Rita Lamb Mayor Pro Tem Present 3:00 PM
Mark Carnevale Councilmember Present 3:00 PM
Nancy Ross Councilmember Present 3:00 PM
Raymond Gregory Councilmember Present 3:00 PM
• AGENDA FINALIZATION
There were no changes to the Agenda.
1. CLOSED SESSION
City Attorney Eric Vail announced that the City Council will meeting in Closed Session to discuss the following items listed on the Agenda:
A. Conference with Labor Negotiator Pursuant to Government Code Section 54956.6
Agency Negotiator: Charles McClendon, City Manager
Represented Employees: Police Management Association (PMA) B. Conference with Legal Counsel - Anticipated Litigation - Consideration of whether to Initiate Litigation Pursuant to Government Code 54956.9(d)(4) Number of Matters: One
Statement
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Conference with Labor Negotiator Pursuant to Government Code Section 54956.6The City Council recessed to Closed Session at 3:02 p.m.
The City Council reconvened at 4:00 p.m.
City A ttorney Eric Vail announced that the City Council met in Closed Session to hold a conference with Labor Negotiator Pursuant to Government Code Section 54956.6. The Agency Negotiator was Charles McClendon, City Manager and the Represented Employees was the Police Management Association (PMA). There was no reportable action taken. The City Council also held a conference with Legal Counsel regarding anticipated litigation - Consideration of whether to Initiate Litigation Pursuant to Government Code 54956.9( d)(4), one matter. There was no reportable action taken.
2. PUBLIC COMMENT
There were no members of the public that wished to make public comment.
3. STUDY SESSION
A. Cannabis Regulation and Tax Update
Recommendation: This item is presented for information, discussion and direction only.
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. Th ese 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 comme nt on the items listed above:
Kenneth Church ill 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 al low 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 bec ause it would be less impactful there. She do es not Cathedral City P a g e 3 Printed on 5/19/2022
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 b y 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 outd oor 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 indus trial 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 disp ensaries 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 discussio n 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 commen t 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 sh ould only have to pay the taxes if they are c ultivating cannabis. She urged the Council to stop wrongly taxing her.
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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 pur chase their cannabis and then there will be n o 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 revie w 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 pe ople out of business by taxing too much and w hat 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 betw een 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 s upportive 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 Gutierre z 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 Cathedral City P a g e 5 Printed on 5/19/2022
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 manufactur ing 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 cultivat ing for a period of 30 to 60 days.
There is no support for changing the retail tax at this time.
B. SB 1383 residential roll out program, amendment to the franchise agreement and rate increase request on commercial, residential, and roll-off services.
Recommendation: The SB 1383 residential roll out program, amendment to the franchise agreement and rate increase request on
commercial, residential, and roll-off services is presented to the City Council for discussion, comments and direction in anticipation of being presented for Public Hearing and City Council approval at the June 8, 2022, City Council Meeting.
This item was postponed to the May 11, 2022, Regular Meeting of the City Council as item 6A.
ADJOURN
Mayor Ernesto Gutierrez adjourned the May 11, 2022, Study Session meeting at 5:28 p.m.
Mayor, City of Cathedral City City Clerk, City of Cathedral City