RESOLUTION NO. ______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL
CITY, CALIFORNIA, ESTABLISHING AN EXEMPTION TO THE CANNABIS
TAX FOR PORTIONS OF CANNABIS CULTIVATION SPACE OUTSIDE OF THE CANOPY PURSUANT TO SECTION 3.48.040 OF THE CATHEDRAL
CITY MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY FINDS:
A. The voters of Cathedral City approved Measure N at the November 2014 general municipal election establishing a tax on the proceeds of cannabis businesses as defined in Measure N in a maximum amount of 15% of proceeds.
B. Measure N authorized the Council to set the tax at a rate that is less than 15% and to establish exemptions, incentives, or other reductions.
C. Resolution 2015-50, adopted August 26, 2015, set a tax rate of 10% for each medical cannabis business that received or receives from the City a permit to operate a medical cannabis business or cooperative in the City.
D. At the time Measure N was approved, dispensaries were the only type of medical cannabis business permitted in the City. Subsequently, the City Council has substantially changed the City’s regulation of medical cannabis businesses, and expanded the types of medical cannabis businesses that are allowed in the City.
E. The City Council placed Measure P on the November 2016 ballot to amend the tax on cannabis businesses to include different tax rates for medical cannabis cultivation and manufacturing, among other things.
F. The voters approved Measure P, which imposes the following taxes on medical cannabis businesses in the City:
•Fifteen cents for each one dollar of gross receipts or fractional part thereof received by a dispensary or by any other cannabis business for activities other than cannabis cultivation or manufacturing.
•Twenty-five dollars for each square foot or fractional part thereof of cannabis cultivation space.
•One dollar for each gram of cannabis concentrate produced or manufactured. •One dollar for each unit of cannabis-infused product other than cannabis concentrate produced or manufactured and packaged or intended for individual sale.
G. Measure P continues to authorize the Council to set the taxes on medical cannabis at lower rates than what was approved by the voters, and to establish exemptions, incentives, or other reductions.
H. On April 26, 2017, the City Council adopted Resolution No. 2017-13 lowering the cannabis tax rates to:
•Ten cents for each one dollar of gross receipts or fractional part thereof received by a dispensary or by any other cannabis business for activities other than cannabis cultivation or manufacturing.
•Fifteen dollars for each square foot or fractional part thereof of cannabis cultivation space.
•Forty cents for each gram of cannabis concentrate produced or manufactured.
•Forty cents for each unit of cannabis-infused product other than cannabis concentrate produced or manufactured and packaged or intended for individual sale.
I. On October 10, 2018, the City Council adopted Resolution No. 2018-46 further modifing the cannabis tax rate applicable to cannabis concentrate to establish different rates for crude concentrate (5 cents per gram), distillate (10 cents per gram), and exotic/boutique concentrate (40 cents per gram).
J. On February 27, 2019, the City Council adopted Resolution No. 2019-02 adjusting the basis upon which the gross receipts tax on dispensaries are calculated so that the tax is calculated based on the gross receipts from the sale of cannabis or cannabis-infused products, and not on any gross receipts received from the sale of non- cannabis merchandise.
K. The City Council now desires to exempt from the cannabis cultivation tax portions of the cannabis cultivation space that are not a part of the canopy, as provided herein.
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY RESOLVES:
SECTION 1. The portions of cannabis cultivation space, as defined in the Cathedral City Municipal Code (‘CCMC”), existing outside of the canopy, as defined below are hereby made exempt from, and shall not be included in the calculation of, the cannabis tax imposed in paragraph B of Section 3.48.010 of the CCMC, as it may be adjusted from time to time by resolution of the City Council pursuant to CCMC Section
3.48.040.
SECTION 2. In addition to all definitions in Chapters 3.48 and 5.88 of the Cathedral City Municipal Code, the following definitions shall apply to this Resolution:
A. “Canopy” means the designated rooms, including nurseries, at a licensed premises that contain or will contain mature or immature plants at any point in time.
B. “Immature plant” or “immature “ means a cannabis plant that has a first true leaf measuring greater than one-half inch long from base to tip (if started from seed) or a mass of roots measuring greater than one-half inch wide at its widest point (if vegetatively propagated), but that is not flowering. For retail purposes, “immature plant” or “immature” means a cannabis plant that is nonflowering and shorter and narrower than 18 inches.
C. “Mature plant” or “mature” means a cannabis plant that is flowering.
D. “Nursery” or “nurseries” means all activities associated with producing clones, immature plants, seeds, and other agricultural products used specifically for the propagation and cultivation of cannabis.
SECTION 3. The exemption provided in Section 1 of this Resolution becomes effective for each licensee upon the renewal of each cultivation license or upon issuance of any new cultivation license.
SECTION 4. This Resolution shall take effect immediately.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Cathedral City held on this __ day of _________, 2022, by the following vote:
Ayes:
Noes:
Absent:
Abstain:
Ernesto Gutierrez, Mayor
ATTEST:
Tracey R. Hermosillo, City Clerk
APPROVED AS TO FORM:
Eric S. Vail, City Attorney