Cathedral City City Council
January 25, 2023

CITY COUNCIL
AGENDA

Study Session
Wednesday, January 25, 2023
3:00 PM

City Council Chambers
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234

MAYOR
Rita Lamb

CITY COUNCIL MEMBERS

Mayor Pro Tem
Mark Carnevale

Councilmember
Nancy Ross

Councilmember
Raymond Gregory

Councilmember
Ernesto Gutierrez
• CALL TO ORDER
• ROLL CALL
• AGENDA FINALIZATION
At this time the City Council may announce any items being pulled from the agenda or continued to another date.

1. PUBLIC COMMENT
This is the opport unity for members of the public to comment on any items not appearing on the regular agenda. Because of restrictions contained in California Law, the City Council may not discuss or act on any item not on the agenda but may briefly respond to statements ma de or ask a question for clarification. The Mayor may also request a brief response from staff to questions raised during public comment or may request a matter be agendized for a future meeting. Public Comment will be limited to three (3) minutes.

2. STUDY SESSION
Normally no action is taken on Study Session items, however, the City Council reserves the right to give specific policy direction and take specific action as Cathedral City P a g e 2
necessary. Presentation will be limited to 10 minutes unless other provisions are made in advance.

A. Historic Preservation Application and Fee Analysis
Recommendation: This item is presented for information, discussion and direction.

B. Cannabis Industry and Taxation Analysis
Recommendation: This item is presented for information, discussion and direction only.

ADJOURN

NOTES TO THE PUBLIC:

The City of Cathedral City complies with the Americans with Disabilities Act of 1990. If you require special assistance to participate in this meeting, please call the City Clerk’s Office at (760) 770-0322 at least 48 hours prior to the meeting.

If you desire to address the City Council during the meeting, please complete a Request to Speak Form available at the entrance and present it to the City Clerk. Speakers will be called upon at the appropriate time.

Any documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection in the City Clerk’s office at City Hall located at 68 -700 Avenida Lalo Guerrero during normal business ho urs. In addition, such documents will be posted on the City’s website at www.cathedralcity.gov.

Cathedral City Page 1 of 2 Printed on 1/19/2023

Staff Report

City Council

Item No. 2.A

Meeting Date: January 25, 2023
From: Robert Rodriguez, Director of Planning/Building
Title: Historic Preservation Application and Fee Analysis

City Council

RECOMMENDATION:

This item is presented for information, discussion and direction.

BACKGROUND:

The Historic Preservation Ordinance, Chapter 8.62 of the Cathedral City Municipal Code, was approved by the City Council on November 30, 2022 . The Ordinance establishes three application processes; 1) to obtain historic designation, 2) certificate of appropriateness, and 3) removal or downgrading of historic designation.

The Planning Department will administer the application and review process and will serve as the staff liaison to the Historic Preservation Committee and the City Council in the review of these applications.

DISCUSSION:

The Planning Department has prepared an application property owners will use to seek designation of their property , undertake any activity requiring a certificate of appropriateness, or modifications to the designation after approval . The proposed application form is attached.

Staff also completed an analysis of the costs incurred by each application type (see attachment 2) , excluding additional costs that may be incurred for City provided surveys, studies, or investigations:

• Obtain historic designation = $3,096.50
• Certificate of appropriateness = $1,691.50
• Removal of downgrading of historic designation = $2,619.00

The policy of the City Council is that in normal circumst ances fees should be charged to recover the fully burdened costs incurred by the City in providing services to applicants.

2.A
Packet Pg. 3

Cathedral City Page 2 of 2 Printed on 1/19/2023
Staff also researched the processes laid out in the ordinances in neighboring cities and the fees charged by cities with comparabl e processes. The fee for historic designatio n is:

• Palm Springs = no fee
• Rancho Mirage = $500
• Palm Desert = no fee
• Redlands = no fee

The cities analyzed did not have a process or fee for removal or downgrading of the historic designation after approval an d only the cities of Palm Springs and Redlands charged for the certificate of appropriateness:

• Palm Desert – Minor alteration = $561, Major alteration = $1,956, Demolition = $2,952
• Redlands – Minor alteration = $356, Major alteration = $615

The application and fee analysis were presented to the Historic Preservation Committee on January 17, 2023. After deliberation, the Committee approved a recommendation to the City Council that no fee be charged to obtain the historic designation and the fees for the certificate of appropriateness and removal or downgrading of historic designation be adopted as presented . The Committee also recommended a fee be charged for the issuance of the markers for approved sites that would help offset staff costs associated with obtaining the historic designation.

FISCAL IMPACT:

None

ATTACHMENTS:

Historic Preservation Application
Historic Application Fees - Cost Analysis and Fee Study

2.A
Packet Pg. 4
Revised December 2022

PLANNING DEPARTMENT
Voice - (760) 770-0340
Fax - (760) 202-1460
E-mail – [email protected]
68-700 Avenida Lalo Guerrero - Cathedral City, CA 92234

(Staff Use Only)
Case No.:

Related Case(s):

HISTORIC PRESERVATION APPLICATION
The completeness of this application, which includes accompanying plans and documents, shall be subject to the review of the Planning Department and Historic Preservation Committee. If you feel a r equirement is not applicable to your project, write “N/A.” If you have any questions while completing this application, please ask a member of the Planning Department for assistance. (PLEASE PRINT OR TYPE)
CHECK APPLICATION TYPE(S) REQUESTED:



Historic Designation ($) *



Certificate of Appropriateness ($) *



Removal or Downgrade of
Historic Designation ($) *

NOTE: Fees with an (*) are deposits. These applications are subject to the Cathedral City Fully Burdened Hourly Rate Schedule for FY 21/22.

PROJECT SUMMARY:

Project Name (if any):

Property/Site Address:

Historic Significance of Property/Site:

Project Description (add extra page(s) if needed):

Assessor Parcel Numbers:

Historic Designation: Is Property located on Tribal Reservation? Existing General Plan Designation:

Existing Zoning Designation:

Existing Uses and/or Structures on Site:

Surrounding Uses: North: South:

East: West:

PROJECT REPRESENTATIVE(S):

APPLICANT/REPRESENTATIVE
Name:

Address: Telephone No.:

City: State: Zip Code:

Contact Person: E-mail Address:

I certify under penalty of perjury that all the application information is true and correct:

Applicant’s Signature: _________________________________________________________

Date: __________________

PROPERTY OWNER
Name:

Telephone No.:

Address: Fax No.:

City: State: Zip Code:

Contact Person: E-mail Address:

I certify under penalty of perjury that all the application information is true and correct:

Owner’s Signature: _________________________________________________________

Date: __________________
All signatures of the property owner(s) must be notarized. Add extra pages if needed for multiple owners.

Date/Time Received:

Received By:

Amount Received: Receipt No(s):

2.A.a
Packet Pg. 5
Attachment: Historic Preservation Application (3595 : Historic Preservation Application and Fee Analysis) Revised December 2022

I, ___________________________________ am the owner of the property described in this application and hereby authorize Print Name
___________________________________ to act on my behalf on matters pertaining to this application.

Applicant/Representative Name

Property Owner’s Signature: ________________________________________ Date: ____________________________

Note: If more than one owner, a separate page must be attached listing the names and addresses of all persons (if a corporation, list officers, and principals) having interest in the property ownership.

ARCHITECT Name: Telephone No.:

Address: Fax No.:

City: State: Zip Code:

Contact Person: E-mail Address:

APPLICANT AGREEMENT AND REIMBURSEMENT AGREEMENT:

Processing of this application will not begin unless this application is complete and all signatures are provided:

I, the undersigned as project Applicant or Representative of the project Applicant, hereby authorize the City of Cathedral City to review the submitted plans and sp ecifications for this Application in accordance with the Cathedral City Municipal Code. I am herewith depositing $____________ to cover staff review, coordination, processing costs, noticing, and materials.

I understand that if the final cos t is less tha n the deposit amount, the unused por tion of the deposit will be refunded upon written request. I further understand that if the c osts are more than the deposit fee, I shall pay the balance due within 30 days of receiving a bill from the City. I also understand that the City will cease processing my Application(s) until the deposit is brought current.

Pursuant to the Fee Schedule, Applications may only be processed if all billed fees and charges for processing the Application(s) have been paid. If in th e course of processing such Application request(s), the Application(s) billed fees and charges have not been paid, the City will after a hearing deny the Application(s) based upon the Applicant’s failure to provide said Application fees and charges as required by this Application.

Applicant(s) acknowledge and agree that by filing this application, and under the authority of Government Code Section 65105, that in the performance of their functions, City staff may enter upon the subject property and make ex aminations and surveys, provided tha t the entries, examinations and surveys do not unreasonably interfere with the use of the land by those persons lawfully entitled to the possession thereof.

I, the Applicant(s) , certify under penalty of perjury that I am the legal owner(s) (all individual owners must sign as they appear on the deed to the land), Corporate Officer(s) empowered to sign for the corporation, Owner's Legal Agent having power of Attorney (a notarized Power of Attorney document must accompany this application), or the owner's authorized representative (include a notarized consent form from the owner).

I, the Applicant( s), acknowledge and agree that I have included all of the required items and understand that missing items may result in delaying the processing of my application.

Applicant(s) agree to defend, indemnify, and hold harmless the City of Cathedral City (“C ity”)

2.A.a
Packet Pg. 6
Attachment: Historic Preservation Application (3595 : Historic Preservation Application and Fee Analysis) Revised December 2022

and its agents, officers, consultants, independent contractors and employees (“City’s Agents”) from any and all claims, a ctions or proceedings against the C ity or the City’s Agents to attack, set aside, void, or annul an approval by the City, or the City’s Agents concerning the Project (collectively “Claim”). The City shall promptly notify the Applicant of any Claim and the City shall cooperate fully in the defense. If the City fails to promptly notify the Applicant of any Claim or if the City fails t o cooperate fully in the defense, the Applicant shall not thereafter be responsible to defend, indemnify, or hold harmless the City. Nothing in this paragraph shall obligate the City to defend any Claim and the City shall not be required to pay or perform any settlement arising from any such Claim not defended by the City unless the settlement is approved in writing by the City. Nothing contained in this paragraph shall prohibit the City from independently defending any Claim, and if the City does decide to independently defend a Claim, the City shall bear its own attorney’s fees, expenses of litigation and costs for that independent defense. The Applicant may agree to reimburse the city for attorney’s fees, expenses of litigation and costs for that independ
ent defense. Should the City decide to independently defend any Claim, the Applicant(s) shall not be required to pay or perfor m any settlement arising from any such Claim unless the settlement is approved by the Applicant.

This Application shall be a public record.

IT IS SO AGREED:

______________________________________
Name of Applicant (Print)

______________________________________
Applicant’s Signature

___________________
Date

2.A.a
Packet Pg. 7
Attachment: Historic Preservation Application (3595 : Historic Preservation Application and Fee Analysis) Revised December 2022

LETTER OF CERTIFICATION

State of California
County of Riverside
City of Cathedral City

I, _____________________ hereby certify that attached list contains the names and addresses of all persons to whom all property is assessed as they appear on the latest available assessment roll of the County of Riverside within the area described and for a distance of three hundred feet (300') from the exterior boundaries of property legally described as:

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

I/we certify (or declare under penalty of perjury under the laws of the State of California) that the foregoing is true and correct.

Print Name _________________________________

Signature __________________________________

2.A.a
Packet Pg. 8
Attachment: Historic Preservation Application (3595 : Historic Preservation Application and Fee Analysis) Revised December 2022

APPLICATION REQUIREMENTS FOR HISTORIC PRESERVATION PROJECTS

Given the special nature of Historic Preservation Projects, all applicants should work with staff for the exact application requirements ; however, each of the following applications should include the following information:

For All Applications:

1. Complete and Signed Application.

2. Three-hundred-foot (300') radius map based on assessor's parcel map, three (3) sets of mailing labels of all property owners with a three-hundred-foot (300') radius, and completion of the Letter of Certification.

Historic Designation:

1. A report that describes how the proposed site, st ructure, building, or object is eligible and appropriate for designation under Chapter 8.62 Historic Preservation of the CCMC . The report shall include at a minimum:
a. Photographs of the exterior of the proposed site, structure, building or object; b. Information about the architect(s), designer(s), planner(s), and/or developers of the proposed site, structure, building or object;
c. Date and method of construction of any structure, building or object upon the proposed site;
d. A description of the character -defining features of the site, structure , building or object , such as materials , architectural or landscape elements, architectural style , and other relevant descriptors;
e. Ownership and address history; and
f. i dentify the source of the information provided in the application, such as building permit numbers, publications, organizations, or individuals.

2. Notarized signatures of all property owners of the property.

3. Any other documentation or research as may be deemed necessary to determine the qualifications of the site, structure, building or object for historic designation.

For Certificate of Appropriateness:

1. A brief description of the proposed demolition, alteration or new construction;

2. P hotographs of each exterior side of the structure or building to be demolished, altered or constructed;

3. Drawings for conceptual review of any demolition, alteration or new construction work;

4. M aterial samples and/or manufacturer’s brochures which show and describe the materials to be used in the alteration or new construction;

5. A site plan showing the location of the proposed demolition, alteration, or new construction work;

6. I f signage is part of the proposed alteration work, drawings showing the specifications for the signage and demonstrating conformance to the City ’s sign ordinance or approved sign program;

7. Any other inf ormation which the city staff deems necessary to accurately describe the scope of alteration or new construction work proprosed.

2.A.a
Packet Pg. 9
Attachment: Historic Preservation Application (3595 : Historic Preservation Application and Fee Analysis) Revised December 2022

QUALIFIED MAP/LIST PREPARERS

The businesses listed below provide property ownership information and radius maps.

Please note that the list is for reference only and that Staff does not provide referrals or imply endorsement of any business.

Donna’s Radius Maps
684 S. Gentry Lane
Anaheim Hills, CA 92807
(714) 921-2921 or (714) 458-4798

NotificationMaps.com
668 N. Coast Highway, #401
Laguna Beach, CA 92651
(866) 752-6266

Advance Listing Services
P.O. Box 2593
Dana Point, CA 92624
(949) 361-3921

Susan Case Inc
917 Glenneyre St., #7
Laguna Beach, CA 92651
(949) 494-6105

Ownership Listing Service
P.O. Box 890684
Temecula, CA 92589-0684
(951) 699-8064

Radius Maps
211 S. State College Blvd. #5
Anaheim, CA 92806
(888) 272-3487 or (714) 323-6031

AM Mapping
(626) 403-1803

Express Mapping
4000 Barranca Parkway, #250
Irvine, CA 92604
(949) 771-0051

2.A.a
Packet Pg. 10
Attachment: Historic Preservation Application (3595 : Historic Preservation Application and Fee Analysis) Staff Cost: Associate Planner (per hr) $191
Public Hearing Notice: Desert Sun Publishing Cost $450
Attorney (per hr) $250
Application Type: Obtain Historic Designation Staff Time (Hrs) Cost ($) Certificate of Appropriateness Staff Time (Hrs) Cost ($) Removal or Downgrading of Historic Designation Staff Time (Hrs) Cost ($) Initial Application Review 2.5 477.50 Initial Application Review 1.5 286.50 Initial Application Review 1 191.00 Historic Preservation Committee Hearing Historic Preservation Committee Hearing Historic Preservation Committee Hearing Public Hearing Notice 450.00 Public Hearing Notice 450.00 Public Hearing Notice 450.00 Prepare Public Hearing Notice & Mailout 1 191.00 Prepare Public Hearing Notice & Mailout 1 191.00 Prepare Public Hearing Notice & Mailout 1 191.00 Prepare Staff Report & Agenda 2.5 477.50 Prepare Staff Report & Agenda 2.5 477.50 Prepare Staff Report & Agenda 2 382.00 Presentation at Hearing 1 191.00 Presentation at Hearing 1 191.00 Presentation at Hearing 1 191.00 City Council Hearing Prepare Letter 0.5 95.50 City Council Hearing Public Hearing Notice 450.00 Public Hearing Notice 450.00 Prepare Public Hearing Notice & Mailout* 0.75 143.25 Total Costs** $1,691.50 Prepare Public Hearing Notice & Mailout* 0.75 143.25 Prepare Staff Report, Resolution & Agenda 2.25 429.75 Prepare Staff Report, Resolution & Agenda 1.75 334.25 Presentation at Hearing 1 191.00 ** Costs do not include surveys, studies or investigations that may be required Presentation at Hearing 1 191.00 Prepare Letter 0.5 95.50 Prepare Letter 0.5 95.50
City Attorney 1.5 375.00 City Attorney 1.5 375.00
Total Costs** $3,096.50 Total Costs** $2,619.00
*Notices may be combined *Notices may be combined
** Costs do not include surveys, studies or investigations that may be required ** Costs do not include surveys, studies or investigations that may be required

2.A.b
Packet Pg. 11
Attachment: Historic Application Fees - Cost Analysis and Fee Study (3595 : Historic Preservation Application and Fee Analysis) City Palm Springs
Application Type: Obtain Historic Designation Process Certificate of Appropriateness Process Removal or Downgrading of Historic Designation Initial Application Review YES Initial Application Review YES Historic Site Preservation Board Hearing YES Historic Site Preservation Board Hearing YES Public Hearing Notice YES Public Hearing Notice YES
Prepare Public Hearing Notice & Mailout YES Prepare Public Hearing Notice & Mailout YES Fee - not specified Prepare Staff Report & Agenda YES Prepare Staff Report & Agenda YES Presentation at Hearing YES Presentation at Hearing YES City Council Hearing YES Prepare Letter YES
Public Hearing Notice YES
Prepare Public Hearing Notice & Mailout* YES Fee for Minor Alterations* $561.00 Prepare Staff Report, Resolution & Agenda YES Fee for Major Alterations $1,956.00 Presentation at Hearing YES Fee for Demolition $2,952.00 Prepare Letter YES
administratively
Fee $0.00
Class 1 $1,274.00
*Minor alterations do not require a hearing and can be done No process for removal or downgrading
Fees for the Mills Act

2.A.b
Packet Pg. 12
Attachment: Historic Application Fees - Cost Analysis and Fee Study (3595 : Historic Preservation Application and Fee Analysis) City Rancho Mirage
Application Type: Obtain Historic Designation Process Certificate of Appropriateness Process Removal or Downgrading of Historic Designation Initial Application Review YES Initial Application Review YES Historic Preservation Commission Hearing YES City Manager or designee Review* Public Hearing Notice YES Historic Preservation Commission Hearing** YES Prepare Public Hearing Notice & Mailout YES City Council Hearing YES Fee - not specified Prepare Staff Report & Agenda YES Prepare Public Hearing Notice & Mailout YES Presentation at Hearing YES Prepare Staff Report & Agenda YES City Council Hearing YES Presentation at Hearing YES
Public Hearing Notice YES Prepare Letter YES
Prepare Public Hearing Notice & Mailout* YES
Prepare Staff Report, Resolution & Agenda YES
Presentation at Hearing YES Fee $0.00
Prepare Letter YES
Fee $500.00 **Not a public hearing
*Minor alterations do not require a hearing and can be done administratively
No process for removal or downgrading

2.A.b
Packet Pg. 13
Attachment: Historic Application Fees - Cost Analysis and Fee Study (3595 : Historic Preservation Application and Fee Analysis) City Palm Desert
Application Type: Obtain Historic Designation Process Certificate of Appropriateness Process Removal or Downgrading of Historic Designation Initial Application Review YES Initial Application Review YES Cultural Resources Preservation Committee Hearing YES Administrator Review* Public Hearing Notice YES Cultural Resources Preservation Committee Hearing YES Prepare Public Hearing Notice & Mailout YES Public Hearing Notice YES Fee - not specified $0.00 Prepare Staff Report & Agenda YES Prepare Public Hearing Notice & Mailout YES Presentation at Hearing YES Prepare Staff Report & Agenda YES City Council Hearing YES Presentation at Hearing YES
Public Hearing Notice YES Prepare Letter YES
Prepare Public Hearing Notice & Mailout* YES
Prepare Staff Report, Resolution & Agenda YES Fee $0.00 Presentation at Hearing YES *Minor alterations do not require a hearing and can be done Prepare Letter YES administratively
Fee $0.00
Application Fee $318.00
Contract Initiation (Deposit) $1,000.00
No process for removal or downgrading
Only fees charged are related to the Mills Act

2.A.b
Packet Pg. 14
Attachment: Historic Application Fees - Cost Analysis and Fee Study (3595 : Historic Preservation Application and Fee Analysis) City Redlands
Application Type: Obtain Historic Designation Process Certificate of Appropriateness Process Removal or Downgrading of Historic Designation Initial Application Review YES Initial Application Review YES Historic & Scenic Preservation Commission YES Preservation Officer* Public Hearing Notice YES Historic & Scenic Preservation Commission YES Prepare Public Hearing Notice & Mailout YES Public Hearing Notice YES Fee - not specified Prepare Staff Report & Agenda YES Prepare Public Hearing Notice & Mailout YES Presentation at Hearing YES Prepare Staff Report & Agenda YES City Council Hearing YES Presentation at Hearing YES
Public Hearing Notice YES Prepare Letter YES
Prepare Public Hearing Notice & Mailout* YES
Prepare Staff Report, Resolution & Agenda YES Fee for Minor Alterations* $356.00 Presentation at Hearing YES Fee for Major Alterations $615.00 Prepare Letter YES
administratively
Fee $0.00
Contract Application $480.00
No process for removal or downgrading
*Minor alterations do not require a hearing and can be done Fees for the Mills Act

2.A.b
Packet Pg. 15
Attachment: Historic Application Fees - Cost Analysis and Fee Study (3595 : Historic Preservation Application and Fee Analysis)

Cathedral City Page 1 of 6 Printed on 1/19/2023

Staff Report

City Council

Item No. 2.B

Meeting Date: January 25, 2023
From: Stone James, Economic Development Director
Title: Cannabis Industry and Taxation Analysis

City Council

RECOMMENDATION:

This item is presented for information, discussion and direction only.

BACKGROUND:

Cannabis businesses became fully legal for both medicinal and adult use with the passage of Proposition 64 by California voters. The full implementation of Prop 64 became effective January 1, 2018. The industry continues to mature in Cathedral City.

Staff provided an update to the City Council at their study session on September 8, 2021, which covered the history of tax collections in Cathedral City and discussed a request from a business owner to consider a retail “tax holiday”. Council decided not to implement a tax holiday.

The Cannabis Task Force met on November 29, 2021. Topics of discussion included the Cathedral City tax structure and tax comparisons with other local cities. The results of the task force m eeting were then discussed with the City Council on January 19, 2022. Council directed staff to conduct a deeper review of the City’s regulations related to cannabis and the tax structure and report back to the task force and ultimately to the City Council.

A staff working group met during the spring of 2022 and developed some recommended revisions to the municipal code regarding cannabis business regulations. These were reviewed by the Cannabis Task Force on April 11, 2022. The Task Force expressed agreement with the recommendations of the staff working group regarding revisions to the code, especially those that would align the municipal code more closely with state law. The Task Force was not supportive of lifting the moratorium on new retail license s south of I -10. The task force also expressed support for some type of tax relief for cultivators, notably limiting the taxable area to the canopy space. There was some support for Council consideration of a reduction in the retail tax rate, at least on a trial basis.

2.B
Packet Pg. 16

Cathedral City Page 2 of 6 Printed on 1/19/2023
The results of the task force discussion were presented to Council in study session on April 20, 2022. In general , Council agreed with the proposed ordinance revisions in some areas and asked for additional information on others. Council agreed with the recommendation to keep the moratorium on new retail licenses in place. A follow up Council study session was held on May 11, 2022 during which the requested additional information was presented and further discussion on taxation occurred. As a result of the discussion, Council provided direction to move ahead with the proposed ordinance revisions, asked for a further discussion on outdoor consumption lounges, provided direction to allow a phase in period for new cultivators prior to taxation beginning, and to provide for a temporary pause on cultivation taxes during a period of non -operation.

There was not support for changing the retail tax and staff was asked to revisit the manufacturing tax structure with the task force.

Further discu ssions were held with the City Council on June 8, 2022 and August 10, 2022. Resolutions amending the cultivation tax definitions to reduce the taxable space and establishing tax exemptions for pre -operational and non -operational businesses were approved on August 10, 2022 and are attached. The ordinance implementing the recommended code amendments introduced for first reading on August 24, 2022 and approved on September 14, 2022 is now in effect.

During the most recent Cannabis task force meeting, the task force had a lengthy discussion on the financial challenges facing the cannabis industry and the financial considerations Councilmembers should consider when evaluating any changes to the tax policy. It was noted the tax revenues from cannabis busines ses are already declining which has been the trend for the past year and half or so.

The task force identified three factors affecting the profitability of the industry:

1. Market saturation - the number of retail outlets in the Palm Springs/Cathedral City market has increased dramatically compared to three years ago.

2. Competition with the “black market”, those selling product from unlicensed suppliers.

3. Taxes are higher than retailers of any other product face. The multiple levels of taxation from the state, the city and regular sales taxes make it harder to attract customers and make a profit.

Task force members acknowledged the retail taxes charged by Cathedral City are in line with those charged by most other cities in the Coachella Valley, but indicated that businesses in those cities, notably Palm Springs are struggling as well.

Task force members also noted that cultivators also are facing increased competition and that unlike retailers, they face competition from a statewide market as product can move readily across the state. Cathedral City’s cultivation taxes are higher than other Coachella Valley cities.

The task force believed decisions regarding the cannabis industry and city tax revenue s need to focus on the long -term survival of the industry within Cathedral City. There is concern the current tax status of the industry is not sustainable. Current trends indicate there will be fewer retail stores and cultivators resulting in the loss of valued jobs and

2.B
Packet Pg. 17

Cathedral City Page 3 of 6 Printed on 1/19/2023
city revenue. The task force believes lowering tax rates are necessary for the long- term survival of the industry.

As Council requested, the task force briefly discussed the manufacturing taxes on the per piece products produced, primarily pre -rolled joints. At a wholesale price of approximately $1.50 each, the 40 cent per piece tax represents an effective tax rate of approximately 27%, or 1,350% higher than surrounding cities . A manufacturing tax rate in the range of 3 to 5 cents per piece would come closer to the target rate of 2%.

During the November 30, 2022, study session, Council instructed Staff to evaluate (i) competitive advantages or disadvantages facing Cathedral City cannabis businesses resulting from Cathedral City tax structures; (ii) the business environment facing Cathedral City cannabis business owners ; and (iii) the impact of the cannabis industry on Cathedral City’s police and fire departments.

DISCUSSION:

The issues confronting the cannabis industry are the result of numerous factors outside the control of any one city co uncil. Local taxes however are within the control of local councils. While changes in local tax rates will not alleviate the negative other-cause impacts, changes to our local cannabis tax rates signal to Cathedral City cannabis businesses (i) the cannabis industry is a valued industry sector, (ii) modifications to existing tax rates can reduce or eliminate financial incentives for Cathedral City cannabis to relocate to adjacent cities (e.g., manufacturing), and (iii) tax relief is still relief and can help reduce the number of problems facing the cannabis industry. To quote a cannabis cultivator, “while there are multiple holes in the boat, plugging one of the holes helps keep our heads above water as we are actively bailing water. It gives us time to solv e other problems and adapt to or navigate our way around a changing industry”.

There are multiple forces impacting the Cathedral City cannabis industry. One cannabis owner when asked what was causing problems within the industry, he stated , “death by a th ousand cuts” . This business owner went on to state i ssues impacting the local cannabis industry range from (i) costly monthly private banking fees ($1,500 to $2,000 or more per month); (ii) downward retail pricing pressure resulting from a growing black market; (iii) bank loans more than 30% per annum, (iv) federal taxes being paid on net gross revenue (gross revenue less cost of goods) verses what all other businesses are typically allowed ( gross revenue s after deducting standard business expenses and costs of goods sold) and (v) high city taxes result in sales lost to lower tax cities and the black market.

Neighboring Jurisdictions’ Taxes
Staff reviewed cannabis taxes in the cities of Palm Springs, Palm Desert, Desert Hot Springs, and Coachella. Currently, La Quinta, Indian Wells and Rancho Mirage do not allow cannabis businesses. On July 20, 2022, the city of Indio authorized the opening of no more than five dispensaries within city limits. A dispensary tax rate has not been determined however, given other Valley cities’ 10% retail tax rate and city of Coachella’s 6% retail tax rate, Council is discussing a retail fee approximating a tax rate of 5% or 6%. Dispensaries are the only type of cannabis business the Indio City Council has

2.B
Packet Pg. 18

Cathedral City Page 4 of 6 Printed on 1/19/2023
authorized.

Coachella Valley City Cannabis Tax Rates by Discipline
City Retail/
Dispensary Cultivation Manufacturing Distribution Testing Cathedral
City
10% on
Gross
Proceeds
$15.00 per sq.ft.
$.05/Crude gram
-
$.10/Distillate gram
-
$.40/Other type item*
Zero** Zero
Coachella
6% on
Gross
Proceeds
In 2023: 3% of
Gross Receipts.

In 2024: 2% of
Gross Receipts
2% on
Gross Receipts Zero Zero
Desert
Hot
Springs
10% on
Gross
Proceeds
$10.20 per sq.ft. Zero Zero Zero
Palm
Desert
10% on
Gross
Proceeds
$13.00 per sq.ft. 2% on
Gross Receipts Zero Zero
Palm
Springs
10% on
Gross
Proceeds
$10.00 per sq.ft. 2% on
Gross Receipts Zero Zero
Indio
Evaluating
5% or 6% on
Gross
Proceeds
Not allowed Not allowed Not allowed Not
allowed
Note:
*: Given current wholesale price of approximately $1.50 per item on pre-rolls, the .40 cent per item tax represents an effective tax rate of 27%.

**: For cannabis products produced within Cathedral City, there is zero tax on distribution.

Cannabis Industry through the eyes of Cathedral City cannabis business owners:

The City Manager’s office contacted all currently licensed Cathedral City cannabis businesses and requested participation in an online survey and interview. Out of 41 - total businesses, 13 businesses responded. Eleven busin esses completed the survey and were interviewed . Survey and interview results are summarized in Exhibit “A” and Exhibit “B”.

2.B
Packet Pg. 19

Cathedral City Page 5 of 6 Printed on 1/19/2023
Police and Fire Department Calls for Service
The Police Department pulled call for service records dating back to January 2020, fo r Cathedral City cannabis businesses. Fifty (50) cannabis businesses were evaluated and included businesses within the cultivation, manufacturing, and d ispensary space. There were 184 calls for service. Of the 184 calls, 37 calls, or 20.11%, were Fire Department/Medical related. The remaining 147 calls were handled by the Police department. Of the 147 calls, 122 calls were routine in nature (patrol check, trespass, suspicious circumstances, or other disturbance). During the reporting period, there was 1 brandishing-a-weapon, 2 domestic disturbances, 1 burglary, 5 thefts, and 10 transient- related calls for service. Exhibit “C” summarizes the various calls.

As previously stated, the issues confronting the cannabis industry are varied and largely outside the c ontrol or influence of our City Council. What is within the control of this Council are local taxes. The cannabis task force and city staff have concluded the following changes will bring some relief to Cathedral City cannabis businesses, may stabilize local sales, and decrease or eliminate financial incentives for Cathedral City cannabis businesses to relocate to other lower tax jurisdictions.

Recommendations:

Retail tax rate reduction to 5%
Cultivation tax rate reduction to $10 per square foot
Manufacturing per piece rate of 3-5 cents.

FISCAL IMPACT:

In calendar year 2021, total cannabis taxes paid to Cathedral City were $4,971,001. In calendar year 2022, total cannabis taxes paid to Cathedral City were $3,693,000 (est.).

Based on 2022 collections, each 1% reduction in the retail tax should result in a revenue loss of $125,000/year.

A reduction in the cultivation tax rate to from $15 to $10/square foot would result in a revenue loss of $ 710,000. The reduction assumes current cultivation activity r emains constant and no Cathedral City businesses relocate their operations to take advantage another jurisdiction’s tax environment.

A reduction in the per gram or per item manufacturing tax would have a negligible cost impact as there are very few manufacturers left in the City. If manufacturers returned to Cathedral City to resume manufacturing operations, a reduction in manufacturing taxes could then result in additional taxes.

ATTACHMENTS:

Cannabis Ordinance Amendments September 2022
CC Reso 2022-43
CC Reso 2022-44
2023-01-25 EXHIBIT A Cannabis Tax Survey Responses
2023-01-25 EXHIBIT B Cannabis Tax Survey Table for Questions 21-25

2.B
Packet Pg. 20

Cathedral City Page 6 of 6 Printed on 1/19/2023
2023-01-25 EXHIBIT C Break Down of Police and Fire Calls for Service at Cannabis Businesses 1-1-2020-12-08-2022
2022-12-01 Cannabis Tax Collected GRAPH of ALL TAXES COLLECTED by Year 2022-12-01 Cannabis Tax Collected TABLE of ALL TAXES COLLECTED 2022-12-01 Cannabis Tax Collected GRAPH of CULTIVATION TAXES COLLECTED by Year
2022-12-01 Cannabis Tax Collected TABLE of CULTIVATION TAXES COLLECTED by Year
2022-12-01 Cannabis Tax Collected GRAPH of MANUFACTURING TAXES COLLECTED by Year
2022-12-01 Cannabis Tax Collected TABLE of MANUFACTURING TAXES COLLECTED by Year
2022-12-01 Cannabis Tax Collected GRAPH of RETAIL TAXES COLLECTED by Year 2022-12-01 Cannabis Tax Collected TABLE of RETAIL TAXES COLLECTED by Year

2.B
Packet Pg. 21

-1-
RIV #4889-3092-9927 v1
ORDINANCE NO. _______

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CATHEDRAL CITY AMENDING CHAPTER 5.88 (CANNABIS

BUSINESSES)
WHEREAS, the City of Cathedral City has allowed a wide range of cannabis businesses to operate within the City, subject to licensing and other regulatory requirements, since Proposition 64 legalized medicinal and adult-use cannabis; and WHEREAS, as the cannabis industry and State regulations evolve, the City desires to update its local regulations to address new concerns and ensure consistency with State requirements; and
WHEREAS, the City Council and Cannabis Task Force have held study sessions on proposed revisions to the City’s cannabis regulations and provided input and direction on desired changes.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1 AMENDMENT OF SECTION 5.88.025 (DEFINITIONS)
A. The definition of “good cause” in Section 5.88.025 is amended as follows:
“Good cause” for purposes of denying an initial local license issuance, for suspending or revoking a local license, or for denying a local license renewal, means:

1. The applicant or licensee has violated been cited for violating any of the terms, conditions or provisions of this chapter, of state law, of any regulations and rules promulgated pursuant to state law, any applicable local rules and regulations, or any special terms or conditions placed upon its conditional use permit, state license, or local license;

2. The premises has been or is proposed to be operated in a manner that adversely affects the public health, safety or welfare or the safety of the immediate neighborhood in which the establishment is located;

3. The applicant or licensee has knowingly made false statements, misrepresentations or material omissions on an application form, renewal form, or any other document submitted to the city;

4. The criminal history of the applicant’s or licensee’s owner(s) indicates that one or more of the owner(s) lack good moral character; 5 An owner of the applicant or licensee is a licensed physician providing physician’s recommendation to qualified patients for medicinal cannabis;

2.B.a
Packet Pg. 22
Attachment: Cannabis Ordinance Amendments September 2022 (3583 : Cannabis Industry and Taxation Analysis)

-2-
RIV #4889-3092-9927 v1

6. The applicant or licensee, or any owner of the applicant or licensee, operated a cannabis business in violation of this chapter or Chapter 9.108 of the code;

76. The applicant or licensees, or any owner of the applicant or licensee, is a person who is prohibited from holding the license under this chapter;

87. The premises proposed to be licensed or the licensed premises is located on land that is owned by the United States and held in trust for any federally- recognized Indian tribe or any member of the tribe, or that is subject to a restriction on alienation imposed by the United States;

98. For renewals, suspensions and revocations, the licensee has allowed a person whose criminal history indicates that person is not of good moral character to work within the premises as an employee, independent contractor, or volunteer; or 109. For renewals, suspensions and revocations, the licensee fails to allow inspection of the security recordings, activity logs, or business records of the licensed premises by city officials.

B. The definition of “Owner” is amended as follows:
“Owner” means any of the following:

1. A person with an aggregate ownership interest of ten twenty percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.

2. The chief executive officer of a nonprofit or other entity.

3. A member of the board of directors of a nonprofit.

4. An individual who will be participating in the direction, control, or management of the person applying for a license.

SECTION 2 AMENDMENT OF SECTION 5.88.035 (LOCAL LICENSE

REQUIRED)
A. Paragraph B of Section 5.88.035 is amended as follows:

B. Beginning January 1, 2018, it is unlawful for a cannabis business to operate in the city unless it has been granted the appropriate temporary or permanent state license(s) for its commercial cannabis activities. Notwithstanding the foregoing, any licensee operating in the city prior to January 1, 2018 may continue to operate without a state license provided that it applies for the appropriate temporary or permanent license(s) from the state no later than forty -five days from the date that the state begins accepting applications. If the state denies the application for a temporary or permanent license(s) for any reason, the cannabis business must cease operations until such time as it obtains the

2.B.a
Packet Pg. 23
Attachment: Cannabis Ordinance Amendments September 2022 (3583 : Cannabis Industry and Taxation Analysis)

-3-
RIV #4889-3092-9927 v1
appropriate temporary or permanent state license(s). It is unlawful for a cannabis business to operate in the city unless it has been granted the appropriate temporary or permanent state license(s) for its commercial cannabis activities. If the state denies the application for a temporary or permanent license(s) for a ny reason, the cannabis business must cease operations until such time as it obtains the appropriate temporary or permanent state license(s).

SECTION 3 AMENDMENT OF SECTION 5.88.065 (CANNABIS BUSINESS

OPERATIONAL REQUIREMENTS)
A. Paragraph I of Section 5.88.065 is amended as follows:

I. Cannabis Consumption on Licensed Premises. Smoking, vaporizing, ingesting, or otherwise consuming cannabis and cannabis products at a licensed premises is prohibited, except on the premises of a licensed dispensary in accordance with Section 5.88.070(JK). “Licensed premises” as used in this subsection includes the actual building, as well as any accessory structures, common areas and parking areas. A sign shall be posted at each entrance to a licensed premises that clearly and legibly states, “Smoking, vaporizing, ingesting, or otherwise consuming cannabis or cannabis products on these premises or in their vicinity is prohibited and a violation of the Cathedral City Municipal Code.” B. Paragraph P (Seed to Sale Tracking Req uired) of Section 5.88.065 is deleted in its entirety, and all subsequent paragraphs within the section are re-lettered to maintain alphabetical order.

C. A new subparagraph 4 is added to paragraph Q (Waste Disposal) of Section 5.88.065 to read as follows:

4. Odor. Disposal of cannabis waste shall be done in a manner consistent with the conditional use permit for the business. The conditional use permit may include conditions to minimize odor generated by cannabis waste, including but not limited to the placement of waste containers and the imposition of odor control requirements.

SECTION 4 AMENDMENT OF SECTION 5.88.070 (DISPENSARY

OPERATIONAL REQUIREMENTS)
A. Paragraph A of Section 5.88.070 is amended as follows:

A. Limited Hours of Operation. A dispensary may only be open to the public and engage in sales between the hours of eight six a.m. and ten p.m.

B. Paragraph B of Section 5.88.070 is amended as follows:

B. Product Not Visible To Public Displays. The display of cannabis and cannabis products for sale shall not be visible from outside the licensed premises include cartoon characters or other images designed to appeal to children .

2.B.a
Packet Pg. 24
Attachment: Cannabis Ordinance Amendments September 2022 (3583 : Cannabis Industry and Taxation Analysis)

-4-
RIV #4889-3092-9927 v1
C. Paragraph I (Sale of Untested Products) is deleted in its entiret y and all subsequent paragraphs in the section are re -lettered to maintain alphabetical order.

D. Subparagraphs 3 and 4 of Paragraph J (Consumption of Cannabis and Cannabis Products on Premises) are amended as follows:

3. Cannabis consumption must occur only within the interior building space of the dispensary areas designated for consumption by the license. Consumption may not occur on patios, in parking areas, or in any other space that is not fully enclosed.

4. The cannabis business must install and maintain in good working order an odor control system in accordance with Section 9.108.080(A)(1). Odors caused by the consumption of cannabis at the dispensary must not be detectable from any public place. The cannabis business shall submit and abide by a certified odor control plan approved by the local licensing authority as a part of the license application and approval process. The plan shall include the use of a Vapor Phase System utilizing an odor neutralizer, such as Cannabolish or a similarly eff ective technology.

SECTION 5 AMENDENT OF SECTION 5.88.095 (PACKAGING AND

LABELING)
A. Paragraph D of Section 5.88.095 is amended as follows:

D. State-Mandated Warnings and Information. All cannabis and cannabis product labels and inserts shall include the state-mandated warnings and information contained in Business and Professions Code Section 26120(c).

Notwithstanding the foregoing, during the period of time that the state permits untested cannabis and cannabis products to be sold to purchasers, all cannabis and cannabis products must have a label affixed to each package that clearly states “This product has not been tested as required by the Medicinal and Adult-Use Cannabis Regulation and Safety Act” and must comply with any other labeling requirements imposed by the state.

SECTION 6 AMENDMENT OF SECTION 5.88120 (CIVIL FINES)
A. Section 5.88.120 is amended as follows:

Any person convicted of an infraction or misdemeanor violation shall, for each separate violation of this chapter, be subject to the following civil fines in amounts set by resolution of the city council in addition to any infraction or misdemeanor penalties.:

A. A fine in an amount not to exceed two hundred fifty dollars for a first conviction of an offense;

2.B.a
Packet Pg. 25
Attachment: Cannabis Ordinance Amendments September 2022 (3583 : Cannabis Industry and Taxation Analysis)

-5-
RIV #4889-3092-9927 v1

B. A fine in an amount not to exceed five hundred dollars for a second conviction of the same offense within a twelve-month period of the date of the first offense;
C. A fine in an amount not to exceed seven hundred fifty dollars for a third conviction of the same offense within a twelve-month period of the date of the first offense; and
D. A fine of one thousand dollars for the fourth and subsequent convictions of the same offense within a twelve-month period of the date of the first offense.

SECTION 7 SEVERABILITY
The City Council declares that, should any provision, section, paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Ordinance as hereby adopted shall remain in full force and effect.

SECTION 8 EFFECTIVE DATE
This Ordinance shall take effect thirty (30) days after its second reading and adoption by the City Council.

SECTION 9 POSTING
The City Clerk shall, within fifteen (15) days after passage of this Ordinance, cause it to be posted in at least three (3) designated public places; shall certify to the adoption and posting of this Ordinance; and shall cause this Ordinance and its certification, together with proof of posting, to be entered in the Book of Ordinances of this City.

SECTION 10 CERTIFICATION
The foregoing Ordinance was approved and adopted at a meeting of the City Council held on the ____ day of _____________, 2022, by the following vote:

Ayes:

Noes:

Abstain:

Absent:
___________________________

2.B.a
Packet Pg. 26
Attachment: Cannabis Ordinance Amendments September 2022 (3583 : Cannabis Industry and Taxation Analysis)

-6-
RIV #4889-3092-9927 v1
Ernesto Gutierrez, Mayor
ATTEST:

____________________________
Tracey Martinez, City Clerk

APPROVED AS TO FORM:

____________________________
Eric S. Vail, City Attorney

2.B.a
Packet Pg. 27
Attachment: Cannabis Ordinance Amendments September 2022 (3583 : Cannabis Industry and Taxation Analysis) RESOLUTION NO. 2022- 43

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

WHERE CANNABIS IS NOT PHYSICALLY PRESENT PURSUANT TO
SECTION 3.48. 040 OF THE CATHEDRAL CITY MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY FINDS:

A. At the November 2016 general election the voters approved Measure P, which imposes the following taxes on 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.

B. Measure P authorizes the Council to set the taxes on cannabis at lower rates than what was approved by the voters, and to establish exemptions, incentives, or other reductions.

C. Via City Council Resolution Nos. 2017- 13, 2018- 46, 2019- 02, and 2020- 05 the City Council has lowered the cannabis tax rates.

D. The City Council now desires to exempt from the cannabis cultivation tax portions of the cannabis cultivation space where cannabis is not physically present, as provided herein.

THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY RESOLVES:

SECTION 1. The gross square footage of the cannabis cultivation space, as defined in the Cathedral City Municipal Code (` CCMC") Section 3. 48. 020, subject to taxation pursuant to Chapter 3. 48 of the CCMC shall be reduced to exempt from taxation those rooms where cannabis is not physically present on a regular basis, including but not limited to nutrient rooms, storage rooms, hallways, offices, employee lounges, and restrooms.

2.B.b
Packet Pg. 28
Attachment: CC Reso 2022-43 (3583 : Cannabis Industry and Taxation Analysis) SECTION 2. 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 3. 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
10th
day of August, 2022, by the following vote:

Ayes: Councilmembers Gregory, Ross and Carnevale; Mayor Pro Tem Lamb and Mayor Gutierrez
Noes:

None

Absent: None
Abstain: None
i
rnesto Gutierrez, Mayor
ATTEST:

Ot, C41 ( th N1/1,C11.0-
Tracey R. lie mosillo, City Clerk

APPROV T O
Eric S. Vail, City Attorney

2.B.b
Packet Pg. 29
Attachment: CC Reso 2022-43 (3583 : Cannabis Industry and Taxation Analysis) RESOLUTION NO. 2022- 44

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL

CITY, CALIFORNIA, ESTABLISHING EXEMPTIONS TO THE CANNABIS TAX FOR CANNABIS CULTIVATION BUSINESSES FOR THE FIRST 90

DAYS OF OPERATIONS AND WHEN OPERATIONS ARE
TEMPORARILY SUSPENDED PURSUANT TO SECTION 3. 48. 040 OF

THE CATHEDRAL CITY MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY FINDS:

A. At the November 2016 general election the voters approved Measure P, which imposes the following taxes on 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.

B. Measure P authorizes the Council to set the taxes on cannabis at lower rates than what was approved by the voters, and to establish exemptions, incentives, or other reductions.

C. Via City Council Resolution Nos. 2017-13, 2018-46, 2019-02, and 2020-05 the City Council has lowered the cannabis tax rates.

D. The City Council now desires to exempt from the cannabis cultivation tax certain legally established cannabis cultivation businesses that have not yet commenced operations or who provide the City with a notice of non- operation, as provided herein.

THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY RESOLVES:

SECTION 1. Except as provided in Section 2 of this Resolution, every cannabis business operating in the City shall pay the cannabis tax imposed in Section 3.48.010 of the Cathedral City Municipal Code, as such tax may be adjusted from time to time by the City Council pursuant to Section 3.48.040 of the Cathedral City Municipal Code.

RIV# 4811- 4257- 5281 vl

2.B.c
Packet Pg. 30
Attachment: CC Reso 2022-44 (3583 : Cannabis Industry and Taxation Analysis) SECTION 2. The cannabis tax imposed in paragraph B of Section 3. 48. 010 of the Cathedral City Municipal Code, as it may be adjusted from time to time by resolution of the City Council pursuant to Section 3.48.040 of the Cathedral City Municipal Code, shall not apply to a legal cannabis cultivation business during the following time periods:

A. Early Operations. A legal cannabis cultivation business shall not be subject to taxation under paragraph B of Chapter 3.48 of the Cathedral City Municipal Code until 90 days after a certificate of occupancy ( whether temporary or final) is issued for the business or any portion thereof.

B. Suspended Operations. A legal cannabis cultivation business shall not be subject to taxation under paragraph B of Chapter 3.48 for a period of no more than ninety 90) days if the cannabis licensee provides the City with written notice that it will be suspending all cultivation operations under its local license for a period of at least ninety 90) days but no longer than the remaining term of the local license issued by the City pursuant to Chapter 5.88 of the Cathedral City Municipal Code. This exemption may be invoked one ( 1) time per license.

SECTION 3. All definitions in Chapters 3.48 and 5.88 of the Cathedral City Municipal Code shall apply to this Resolution.

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
10th
day of August, 2022, by the following vote:

Ayes: Councilmembers Gregory, Ross and Carnevale; Mayor PRo Tem Lamb and Mayor Gutierrez
Noes: None

Absent: None
Abstain: None
Ernesto Gutierrez, Mayor
ATTEST:

Lb 13x
Trac ermosil. lo, CityClerkY
RIV# 4811- 4257- 5281 vl

2.B.c
Packet Pg. 31
Attachment: CC Reso 2022-44 (3583 : Cannabis Industry and Taxation Analysis) APPROVED AS It FO'
Eric S. Vail, City Attorney
RIV# 4811- 4257- 5281 vl

2.B.c
Packet Pg. 32
Attachment: CC Reso 2022-44 (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
1 | P a g e
January 25, 2023

In November 2022, Charlie McClendon contacted forty-one Cathedral City cannabis businesses via email.

Mr. McClendon explained the City Council is evaluating current tax rates and wanted to learn more about the cannabis industry through the eyes of Cathedral City-based cannabis businesses. Thirteen business owners volunteered to participate in an on-line survey and follow up interview. Eleven businesses completed the survey.

In December 2022, the Economic Development Department and City Manager’s office created and circulated a 29-question survey. The survey consisted of multiple choice and short answer questions.

Questions were broken into the following four categories:
1) Background questions (size, time in business, and type of cannabis business) (four questions) 2) Financial health (four questions)
3) Financial analysis:
a. Cultivation businesses (eleven questions)
b. Retail (dispensary) businesses (seven questions)
4) Closing questions (three questions)
Either Mr. McClendon or Economic Development Director Stone James met with each survey participant (in-person, via zoom, or over the phone) and reviewed the completed survey. Interview comments provided by the business owner are noted at the bottom of this report. Not all business owners responded to all questions. The responses noted below are reported verbatim unless otherwise noted. Response numbers (Response 1, Response 2, and Response 3) present the number of responses to each question and is not intended to number a consistent respondent.

Business owners agreed to provide detailed confidential information based on the assurance of complete confidentiality and that no names or identifying labels would be included in the final reports.

Below is a summary of responses.

2.B.d
Packet Pg. 33
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
2 | P a g e
January 25, 2023
GENERAL QUESTIONS: Questions 1-4 are general questions that apply to all cannabis businesses.

Question 1: How long have you operated your cannabis business in Cathedral City?

Question 2: What type of cannabis business do you operate?

2.B.d
Packet Pg. 34
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
3 | P a g e
January 25, 2023
Question 3: How many people do you currently employ? In this employee count, please include those with an ownership interest who are actively involved in the operation of the business.

Question 4: Do you own or manage cannabis businesses in other cities?

FINANCIAL HEALTH: Questions 5-8 deal with the respective businesses’ financial health and apply to all cannabis businesses.

Question 5: Are you concerned about the condition of the current cannabis market? (Respondents were requested to rate their level of concern on a scale of 0-10, 10 being the most concerned. 54.5% of respondents selected “10”)

2.B.d
Packet Pg. 35
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
4 | P a g e
January 25, 2023

Question 6: How many people have laid off in the last six months due to market conditions (lower than expected revenues, NOT due to performance issues)?

2.B.d
Packet Pg. 36
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
5 | P a g e
January 25, 2023
Question 7: How many months of cash reserves does your business have?

Question 8: Given your experience in the industry, what would you want the City Council to know about the current state of affairs within the cannabis industry? Response 1: “Market conditions since December2021 are terrible, our sales are 15% of last years and I have had to inject cash into the business every month in 2022.” Response 2: “Almost worthless. Over taxation and regulation has made it a money losing business” Response 3: “Overtaxed Overregulated and unsustainable” Response 4: “The combination of over taxation & a thriving black market makes it extremely difficult to survive on the white market side.”
Response 5: “retailers are seriously in trouble, along with new excise tax requirements from the state, we will have a rough year and business will be forced to close. Once that happens it is almost impossible to have start again.”
Response 6: “Black market prices continue to go down, which causes us to lower our prices to compete. Our margins have been eliminated”
Response 7: “The pandemic economically hurt the dispensaries. Nearly overnight I lost nearly 40% of my customer base. Even though we were deemed essential services, people stopped coming. People lost their jobs and to save money, many turned to the black market, all reports showed it did and is flourishing. Many of the original dispensaries have closed or been sold. They were not sold because people made a profit, they were sold because owners were hemorrhaging money. The point of legal cannabis is to provide safe cannabis for consumption. If the effective tax rate was lowered, dispensaries would be able to offer a overall lower price and regain local customers since there is a seasonal flow for visitors. The largest cultivator in CA held taxes ransom in a trust account. Next thing, cultivators have the tax abated. Starting Jan 1, Gov Newsome has allowed us to collect and pay

2.B.d
Packet Pg. 37
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
6 | P a g e
January 25, 2023
excise tax at point of sale, instead of pre-paying at time of delivery. The reason why these changes are happening is because the financial burden put on cannabis businesses is tremendous. This type of tax burden is not sustainable. When legal cannabis was conceived and the hype about how much money it would make, the price of anything cannabis (rent, remodel, repairs, advertising, accounting, etc) more than doubled for cannabis. CDTFA allows dispensaries to pay tax on products at their sold price, which includes taking into account products that are put on sale. The City applies the cannabis tax of FULL amount based on Metric. This does not take into account that there are so many licenses which makes it very competitive, and you have to offer daily deep discounts. Many of us offer 15-30% discounts and a loyalty program. On flower Friday, we have 30% discount, then the State getting 15% and the City taking 18.75% off the top, there is little profit left. Many of the original dispensaries that got a license have now closed or have been sold. Those business owners did not sell at a profit and made money. Instead, they sold or walked away to stop the hemorrhaging of money in a unsustainable business model.”
Response 8: “Major issues on the 'supply side' of the industry - too many cultivators and brands to be sustainable. On the 'demand side' consumers are definitely cutting back their spend, frequency of use, and some of the 'novelty' is wearing off.”
Response 9: “The current challenges are unprecedented. The macro-economics i.e., current crash of wholesale pricing, demand, lack of banking/financing etc. compounded with microeconomics of running a cannabis business, i.e., inability to write off certain expenses, taxes, wages etc. are compounding making the business extremely difficult to manage. For our cultivation business, we have been able shed as much expenses in order to survive and have been fortunate to not lose any harvest however we are one bad harvest away from illiquidity. I, as a principal in what I incorrectly anticipated to be a more passive investment find myself working two roles in order to make ends meet.

Look forward to further discussing any additional items or further expounding on any topic.” Response 10: “its oversaturated and over Taxed and it's not treated like all the other businesses, no real penalties for black market operators.”
Response 11: “The industry is starting to consolidate and there are many licensed retail dispensaries that are struggling throughout the state. The problem is that taxes are high, and we aren't afforded the same write-offs as normal businesses. It's hard for operators to set aside cash reserves when they are barely turning profits.”
FINANCIAL ANALYSIS (Cultivation Only): Questions 9-19 ask specific questions related to the operation of Cathedral City-based cultivation businesses.

Question 9: When did your cultivation business first open? Response 1) February 28, 2018
Response 2) June 1, 2018
Response 3) August 22, 2018
Response 4) November 8, 2018
Response 5) January 1, 2020
Response 6) August 24, 2021

2.B.d
Packet Pg. 38
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
7 | P a g e
January 25, 2023

Question 10 and 11 apply to cultivation businesses:

Question 10: After first opening for business, how much per pound were you selling your cannabis product for?

Question 11: Currently, how much are you selling your cannabis product for?

Response
Question 10
Cannabis Sales Price
per Pound Upon
Opening for Business
Question 11
Current Cannabis
Sales Price per Pound
Percentage Change
1 $1,650.00 (big or small) $900.00 for big $400 for
small -45% to –76%
2 $2,500 $850 -66%
3 $2,800 $800 -71%
4 $1,800 $1,100 -39%
5 $1,500 to $1,800 $400 to $600 -73% to –67%

Questions 12 – 15 are summarized in the below table. Question order has been modified to improve the flow and readability of the below table. Again, these questions were asked only of cultivators and focused on the month of October 2022:

Question 12: In October 2022, what was your gross revenue? Question 15: In October 2022, how much were your other expenses (e.g., payroll, energy, water, other supplies, and utilities, etc.)?
Question 13: In October 2022, how much did you pay to Cathedral City in cannabis taxes?
Question 14: In October 2022, how much did you pay to the State of CA in cannabis taxes?

Question 12
(Cultivation)
Question 15
(Cultivation) Question 13
(Cultivation)
Question 14
(Cultivation) (Cultivation) (Cultivation)
Response October 2022
Gross Revenue
October 2022
Other
Expenses
October
2022
Net
Revenue
October 2022
Cathedral
City
Taxes Paid
October 2022
California
State
Taxes Paid
October 2022
Total Taxes
Taxes as a
Percentage of
Net Revenue
1 $17,350 $61,095 $(43,745) $3,461 $1,750 $5,211
Taxes Paid on
Negative Net
Revenue
2 $175,000 $170,000 $5,000 $17,000 $7,000 $24,000 480% 3 $184,625 $202,839 $(18,214) $10,726 Respondent
failed to provide $10,726
Taxes Paid on
Negative Net
Revenue
4 $131,499 $200,000 $(68,501) $24,964 Respondent
failed to provide $24,964
Taxes Paid on
Negative Net
Revenue

2.B.d
Packet Pg. 39
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
8 | P a g e
January 25, 2023

Questions 16 – 19 are cultivation-focused, based on a 12-month fiscal period, and summarized in the below table:

Question 16: In your most recent 12-month fiscal period, what was your gross revenue? Question 17: In your most recent 12-month fiscal period, how much did you pay to Cathedral City in cannabis taxes?
Question 18: In your most recent 12-month fiscal period, how much did you pay to the State of California in cannabis taxes?
Question 19: In your most recent 12-month fiscal period, how much were your other expenses (e.g., payroll, energy, water, other supplies and utilities, etc.)?

Response
Question 16
(Cultivation)
Question 19
(Cultivation)
Question 17
(Cultivation)
Question 18
(Cultivation) (Cultivation) (Cultivation)
1 Last 12-
Months
Gross
Revenue
Last 12-
Months
Other
Expenses
Last 12-
Months
Net
Revenue
Last 12-
Months
Cathedral
City
Taxes Paid
Last 12-
Months
California
State
Taxes Paid
Last 12-
Months
Total Taxes
Taxes as a
Percentage
of Net
Revenue
2 $158,154 $781,180 $(623,026) $47,487 $21,000 $68,487 Taxes Paid on
Negative Net
Revenue
3 $1,950,000 $1,825,900 $124,100 $215,000 $115,000 $330,000 266% 4 $2,717,638 $2,411,577 $306,061 $128,715 $35,410 $164,125 54% 5 $2,112,064 $911,784 $1,200,280 $299,568 $94,934 $394,502 33%

FINANCIAL ANALYSIS (Retail or Dispensary Only): Questions 20-26 ask specific questions related to the operation of Cathedral City-based dispensary.

Question 20: When did your dispensary first open for business? Response 1: January 1, 2017
Response 2: January 20, 2017
Response 3: November 8, 2017
Response 4: September 9, 2017
Response 5: January 1, 2019
Response 6: August 19, 2019
Response 7: June 1, 2019
Response 8: May 11, 2022

Questions 21 – 26 are retail (dispensary) focused and summarized in the below table:

2.B.d
Packet Pg. 40
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
9 | P a g e
January 25, 2023
Question 21: What were your gross revenues when you first opened Question 22: In October 2022, what were your gross revenues? Question 23: In October 2022, how much did you pay in State cannabis taxes? Question 24: In October 2022, how much did you pay in sales taxes (8.75%)? Question 25: In October 2022, how much did you pay in Cathedral City Cannabis taxes? Question 26: In October 2022, how much did you pay in other expenses (e.g., cost of goods sold, payroll, utilities, all other expenses)

See Exhibit “B” for responses

CLOSING QUESTIONS: Questions 27-29 ask general questions to all Cathedral City-based cannabis business owners. This section was intended to provide business owners a final opportunity to share their perspective with City Council and city staff.

Question 27: What would you want the Cathedral City Council to keep in mind when evaluating the appropriateness of the current tax levels? Recognizing this is an anonymous survey, please keep personally identifying information out of these closing responses.

Response 1: “Please lower the taxes and renewal fee as this market condition is unlikely to improve in the near future.”

Response 2: “Without immediate changes many businesses will close and leave a giant hole in the cathedral city real estate market. These businesses have very few other applicable uses. Should cultivation and manufacturing leave there will be 100's of thousands of square feet that will be empty. Look towards San Francisco (who suspended all cannabis taxes) or Santa Rosa which reduced all taxes and eliminated some.”

Response 3: “Keep in mind that your tax rate is restricting sales potential”

Response 4: “Cutting the city excise tax to 5% would give my business roughly $10k a month to help reduce the cost of products to consumer & help bring traffic from surrounding cities. Also allows the business to have more marketing dollars to advertise surrounding areas and bring cannabis dollars to Cathedral City.”

Response 5: “We understand that taxes are important to the city as citizens, we are just asking for a little break because we are all going to go under. There are businesses struggling to stay open”

Response 6: “They have the highest Retail tax in the state. They have one of the highest cultivation taxes in the state. If you do not find a more reasonable tax rate, we will all be forced to find new places to operate our business.”

Response 7: “5% if you keep the full price as the tax base and not allow taxing on actual sale price (discounts).”

2.B.d
Packet Pg. 41
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
10 | P a g e
January 25, 2023

Response 8: “Needs to be a balance between taxing operators and making prices too high which is still forcing customers, especially heavy users, to frequent the illicit market.”

Response 9: “Considering market conditions, both parties need to be making every effort to work with each other in order to ensure a fair, equitable opportunity to succeed. Numerous other cities in the Coachella valley offer more attractive tax structures between $5-$10/sf of canopy. Is an important distinction that some cities charge on canopy space which is ultimately the main potential revenue generator. The tax should be targeted towards flower room space only, not vegetation space. Also lack of clear guidelines, consensus on exact detail of tax structure.”

Response 10: “We would like to see our taxes more in line with all the other industries in the City.”

Response 11: “I think the city council should chat more in depth with the finance people in cannabis. It'll allow them a deeper understanding into the financial burdens that we take on.”

Question 28: Is there anything else you would like to communicate to Cathedral City staff or the City Council?
Response 1: “I think it's unfair as a business owner to pay these excessive fees, compared to any other the business”

Response 2: “Please reduce taxes. The cultivation tax is killing the business.”

Response 3: “Your greediness is a major part of poor sales.”

Response 4: “We want to be able to continue business in Cathedral City”

Response 5: “Initial surveys have shown that Cathedral City residents would support a voter referendum that lowers the tax to 3%. If the city continues to do nothing, we will be forced to try a new route.”

Response 6: “If you lower the tax, I believe sales (tax) will increase in the long term to make up for any losses.”

Response 7: “It would be great for the council members to reach outside of the Coachella Valley to see all the concessions other City's are making for the Cannabis business to succeed as this wild west industry.”

Response 8: “I think this survey is the first step in better understanding our needs. We look forward to working with the city more in depth.”

2.B.d
Packet Pg. 42
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
11 | P a g e
January 25, 2023

Question 29: Is there anything other comments you would like to add? Response 1: “The fear mongering that cannabis sales would increase crime has not happened.

Please do not hold us accountable to pay for policing. That was your reasoning 5 yrs. ago...there are more calls for service at Target, Henry's, and every other local bar vs all of your dispensaries combined.”

Response 2: “I understand the challenges any city must face with tax revenue and budgeting however it feels like cannabis has an outsized tax burden levied vs other business while lacking some essential support services and benefits. At the onset in order to create regulatory framework and ultimately receive the support or resident constituents, outsized tax benefits to the city for a potentially burgeoning new industry was a reasonable narrative / strategy. With today’s reality, vastly different from initial conception something has to change and we need more support or at least our tax burden to be in-line with any other sector in the city.”

Response 3: “It's Farming and not every harvest does the same thing, this is why it would be nice to pay a % of gross sales vs this flat fee, just like when the car dealership sales a car or NOT.”

Response 4: “No. Thank you for your time.”

Supplemental Responses from Business Owner Interviews:

From a dispensary owner: “Prior to January 1, 2023, the State of California charged cannabis retailers the 10% cannabis State tax when the retailers purchased wholesale products. The cannabis tax was calculated as follows: 10% tax on 80% of the wholesale purchase price (Cannabis tax = (total wholesale purchase price x 80%) x (10%) or Cannabis Tax=(WPP*.8)*(.10). If a product expired and was never sold, the tax on the sale of the product had already been paid and was unrecoverable. If a cannabis product was sold below 80% of the wholesale price, the effective tax was exceeded 10%. Lastly, paying the tax before the product was sold negatively impacted the cannabis retailer’s cash position.”

From a dispensary owner: “Death by a thousand cuts. There was not one bad policy or factor that is harming the cannabis industry. The challenges facing the cannabis industry are resulting from a confluence of factors such as:
i. Taxes: What business do you know pays federal taxes on gross income (gross revenue less cost of goods sold)? All other businesses in the United States pay federal taxes on net income after deducting cost of goods sold and reasonable business expenses. ii. Challenges with banking: A cannabis business cannot walk down and open an account at Wells Fargo. Cannabis businesses have to find a bank who is able and willing to provide banking services for the cannabis business.
iii. Costs to apply for banking: It costs around $7,000 to apply for a bank account.

2.B.d
Packet Pg. 43
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Exhibit “A”
Cannabis Tax Analysis
Q4 2022 Survey and Interview Results
12 | P a g e
January 25, 2023
iv. Costs to maintain a bank account: Banks which serve cannabis businesses charge between 1% to 1.5%. This means I am spending $1,500 to $2,500 each month to maintain a bank account.
v. Loans: Since cannabis is still federally illegal, instead of being charged 6% to 10% for a business loan, loans for cannabis businesses range from 30% to 35%. vi. From construction contractors to equipment to service providers, everyone charges higher prices for cannabis related work because most people think cannabis businesses are rich”.

2.B.d
Packet Pg. 44
Attachment: 2023-01-25 EXHIBIT A Cannabis Tax Survey Responses (3583 : Cannabis Industry and Taxation Analysis) Question 21
(Retail)
Question 22
(Retail)
Question 23
(Retail)
Question 24
(Retail)
Question 25
(Retail) (Retail)
Gross Revenues
Upon First
Opening
October 2022
Gross
Revenues
October 2022
Business
Expenses
October
2022
Net
Revenue
October 2022
California State
Cannabis
Taxes Paid
October 2022
California State
Sales Tax Paid
(8.75%)
October 2022
Cathedral
City
Taxes Paid
Total
Taxes
Paid
Taxes as a
Percentage of Gross
Revenue
Respondent failed to
provide response $76,559 $75,984
$575
$6,744 $6,699 $7,654 $21,097
Taxes paid exceed
net revenue by
2,662%
$1.09M/Yr (2021)$200,000
"Debit from
business
account"
Respondent
failed to
provide
response
(27% tax on
wholesale price
paid
$17,500 $20,000 $37,500 18.8%
$1.8M/Yr (2017)
$150,000/Month$63,626
"from sales and
borrowing
from trust"
Respondent
failed to
provide
response
$3,817 $5,567 $6,363 $15,747 24.7%
$3.2M/Yr (in
2018)
$266,667/Month
$107,007 $8,610 $98,397 $10,928 $9,363 $10,700 $30,991 31.5% $303,229/Yr
(2017)
$1.02M/Yr
(2018)
$30,611 $59,511 ($28,900) $7,726 $2,678 $3,635 $14,039 20.6% Tax paid on Gross Revenue
$1.5M/Yr
$1.0M
Annually
$83,333/Month
$65,000 $18,333 $25,000 (est.) $7,292 $7,000 $39,292 214.3% $40,000 $32,000 $47,067 ($15,067) $4,500 $2,800 $2,900 $10,200 17.8% Tax paid on Gross Revenue
Exhibit "B"Cannabis Tax AnalysisQ4 2022 Survey and Interview Results

2.B.e
Packet Pg. 45
Attachment: 2023-01-25 EXHIBIT B Cannabis Tax Survey Table for Questions 21-25 (3583 : Cannabis Total
number of
calls
Violent or
Potentially
Violent Crime
Domestic
Disturbance
(Various
types)
Terrorist
Threats
(422 P.C.)
Robbery
(459 P.C.)
Burglary
(211 P.C.)
Grand or
Petty Theft
Transient
Related
Routine
Police
Calls
Medical
(Fire
Dept)
Other
Fire Dept
Calls
(Non-Med)
184 1 2 4 2 1 5 10 122 14 23
% of Total
Calls 0.54% 1.09% 2.17% 1.09% 0.54% 2.72% 5.43% 66.30% 7.61% 12.50% Exhibit "D"
Cannabis Tax Analysis
Police and Fire Department Calls for Service By Call Type Time Frame: January 1, 2020 thru December 8, 2022

2.B.f
Packet Pg. 46
Attachment: 2023-01-25 EXHIBIT C Break Down of Police and Fire Calls for Service at Cannabis Businesses 1-1-2020-12-08-2022 (3583 :
$- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 January February March April May June July August September October November December Cathedral City All Cannabis Taxes by Year20182019202020212022

2.B.g
Packet Pg. 47
Attachment: 2022-12-01 Cannabis Tax Collected GRAPH of ALL TAXES COLLECTED by Year (3583 :

Cathedral City
Cannabis Tax Collection History
By Sector (Retail, Cultivation, and Manufacturing)
January February March April May June July August September October November December Grand Total 2018 178,608$ 179,414$ 221,865$ 307,995$ 218,517$ 238,813$ 341,222$ 397,896$ 465,449$ 475,454$ 343,710$ 320,340$ 3,689,283$ Grand Total 2019 329,263$ 377,048$ 415,853$ 433,602$ 417,177$ 305,890$ 414,678$ 370,230$ 362,589$ 354,490$ 356,768$ 325,886$ 4,463,475$ Grand Total 2020 342,847$ 336,941$ 315,705$ 368,543$ 389,887$ 378,031$ 422,935$ 406,320$ 392,210$ 441,350$ 392,213$ 408,603$ 4,595,586$ Grand Total 2021 408,512$ 394,924$ 448,197$ 433,678$ 454,624$ 402,744$ 381,821$ 395,414$ 379,230$ 469,819$ 430,877$ 372,563$ 4,972,400$ Grand Total 2022 344,103$ 389,930$ 367,423$ 340,886$ 304,096$ 281,175$ 299,744$ 277,369$ 253,963$ 263,410$ 263,119$ - $ 3,385,218$ January February March April May June July August September October November December Total Difference 2018 to 2019150,655$ 197,635$ 193,989$ 125,607$ 198,659$ 67,077$ 73,456$ (27,666)$ (102,860)$ (120,964)$ 13,058$ 5,547$ 774,192$ Difference 2019 to 2020 13,584$ (40,107)$ (100,148)$ (65,059)$ (27,290)$ 72,141$ 8,257$ 36,089$ 29,622$ 86,860$ 35,445$ 82,717$ 132,111$ Difference 2020 to 2021 65,665$ 57,983$ 132,492$ 65,135$ 64,737$ 24,713$ (41,115)$ (10,906)$ (12,980)$ 28,469$ 38,664$ (36,040)$ 376,815$ Difference 2021 to 2022(64,409)$ (4,994)$ (80,774)$ (92,792)$ (150,528)$ (121,568)$ (82,077)$ (118,045)$ (125,267)$ (206,408)$ (167,758)$ (1,587,182) $ Year-to-Year Difference in Total Cannabis Taxes Collected All Cannabis Taxes Collected Across Retail, Cultivation, and Manufacturing

2.B.h
Packet Pg. 48
Attachment: 2022-12-01 Cannabis Tax Collected TABLE of ALL TAXES COLLECTED (3583 : Cannabis $- $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 January February March April May June July August September October November December Cathedral City Cannabis Cultivation Taxes by Year20182019 20202021
2022

2.B.i
Packet Pg. 49
Attachment: 2022-12-01 Cannabis Tax Collected GRAPH of CULTIVATION TAXES COLLECTED by Year Cathedral City
Cannabis Tax Collection History
By Sector (Retail, Cultivation, and Manufacturing)
January February March April May June July August September October November December Totals 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 Total Cultivation 2018 59,840$ 59,840$ 59,840$ 61,700$ 61,904$ 73,524$ 109,527$ 87,183$ 98,817$ 114,923$ 116,492$ 113,756$ 1,017,346$ 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Total Cultivation 2019 113,149$ 118,825$ 130,000$ 130,904$ 126,032$ 123,054$ 133,924$ 133,358$ 137,701$ 143,458$ 150,708$ 149,136$ 1,590,250$ 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 Total Cultivation 2020 150,468$ 151,259$ 151,176$ 185,393$ 182,895$ 180,131$ 184,848$ 180,617$ 175,638$ 211,596$ 205,855$ 201,873$ 2,161,748$ 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 Total Cultivation 2021 203,325$ 210,868$ 210,045$ 205,437$ 209,791$ 200,417$ 205,862$ 206,406$ 206,301$ 205,628$ 201,165$ 206,280$ 2,471,525$ 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 Total Cultivation 2022 206,580$ 210,587$ 204,631$ 184,771$ 162,750$ 166,315$ 192,923$ 192,936$ 154,798$ 154,864$ 150,976$ 1,982,129$ January February March April May June July August September October November December Totals Difference 2018 to 2019 53,309$ 58,985$ 70,160$ 69,204$ 64,128$ 49,530$ 24,397$ 46,176$ 38,884$ 28,535$ 34,216$ 35,379$ 572,904$ Difference 2019 to 2020 37,319$ 32,434$ 21,176$ 54,489$ 56,863$ 57,077$ 50,923$ 47,258$ 37,937$ 68,138$ 55,147$ 52,737$ 571,498$ Difference 2020 to 2021 52,857$ 59,609$ 58,869$ 20,044$ 26,896$ 20,286$ 21,014$ 25,789$ 30,663$ (5,968)$ (4,690)$ 4,407$ 309,776$ Difference 2021 to 2022 3,255$ (281)$ (5,415)$ (20,667)$ (47,041)$ (34,102)$ (12,939)$ (13,469)$ (51,503)$ (50,764)$ (50,189)$ (283,116) $ Cannabis Cultivation Tax Collected
Year-to-Year Difference in Cannabis Cultivation Taxes Collected

2.B.j
Packet Pg. 50
Attachment: 2022-12-01 Cannabis Tax Collected TABLE of CULTIVATION TAXES COLLECTED by Year $- $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 January February March April May June July August September October November December Cathedral City Cannabis Manufacturing Taxes by Year
2018
2019
2020
2021
2022

2.B.k
Packet Pg. 51
Attachment: 2022-12-01 Cannabis Tax Collected GRAPH of MANUFACTURING TAXES COLLECTED by Cathedral City
Cannabis Tax Collection History
By Sector (Retail, Cultivation, and Manufacturing)
January February March April May June July August September October November December 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 Total Manufacturing 2018 -$ -$ 10,606$ 76,119$ 20,802$ 32,497$ 109,592$ 184,778$ 203,755$ 224,842$ 72,628$ 56,250$ 991,868$ 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Total Manufacturing 2019 65,559$ 82,507$ 104,510$ 118,009$ 121,753$ 53,579$ 144,339$ 98,317$ 96,799$ 71,170$ 57,360$ 20,063$ 1,033,965$ 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 Total Manufacturing 2020 30,053$ 53,809$ 33,023$ 48,082$ 38,741$ 37,381$ 60,291$ 77,148$ 67,865$ 86,168$ 56,980$ 54,506$ 644,047$ 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 Total Manufacturing 2021 66,283$ 61,262$ 86,527$ 83,695$ 116,773$ 84,298$ 59,041$ 78,472$ 76,081$ 149,075$ 113,796$ 38,487$ 1,013,791$ 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 Total Manufacturing 2022 24,382$ 61,031$ 32,314$ 21,293$ 22,334$ 17,010$ 12,950$ 9,523$ 16,999$ 18,696$ 14,589$ 251,120$ January February March April May June July August September October November December Total Difference 2018 to 2019 65,559$ 82,507$ 93,904$ 41,891$ 100,951$ 21,082$ 34,747$ (86,461)$ (106,956)$ (153,672)$ (15,268)$ (36,187)$ 42,097$ Difference 2019 to 2020 (35,506)$ (28,698)$ (71,487)$ (69,927)$ (83,012)$ (16,198)$ (84,048)$ (21,169)$ (28,934)$ 14,998$ (379)$ 34,443$ (389,918)$ Difference 2020 to 2021 36,230$ 7,453$ 53,504$ 35,613$ 78,032$ 46,917$ (1,250)$ 1,323$ 8,216$ 62,907$ 56,816$ (16,019)$ 369,744$ Difference 2021 to 2022 (41,902)$ (231) $ (54,213)$ (62,403)$ (94,440)$ (67,288)$ (46,091)$ (68,949)$ (59,082)$ (130,379)$ (99,207)$ (724,184) $ Cannabis Manufacturing Tax Collected
Year-to-Year Difference in Cannabis Manufacturing Taxes Collected

2.B.l
Packet Pg. 52
Attachment: 2022-12-01 Cannabis Tax Collected TABLE of MANUFACTURING TAXES COLLECTED by $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 January February March April May June July August September October November December Cathedral City Cannabis Retail (Dispensary) Taxes by Year20182019202020212022

2.B.m
Packet Pg. 53
Attachment: 2022-12-01 Cannabis Tax Collected GRAPH of RETAIL TAXES COLLECTED by Year (3583 :

January February March April May June July August September October November December 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 Total Cannabis Retail 2018 118,768$ 119,574$ 151,418$ 170,176$ 135,811$ 132,792$ 122,103$ 125,935$ 162,877$ 135,689$ 154,590$ 150,333$ 1,680,068$ 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 Total Cannabis Retail 2019 150,555$ 175,715$ 181,343$ 184,688$ 169,392$ 129,257$ 136,415$ 138,555$ 128,089$ 139,862$ 148,701$ 156,688$ 1,839,260$ 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 Total Cannabis Retail 2020 162,326$ 131,873$ 131,506$ 135,068$ 168,251$ 160,519$ 177,797$ 148,554$ 148,707$ 143,586$ 129,378$ 152,224$ 1,789,790$ 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 Total Cannabis Retail 2021 138,903$ 122,794$ 151,625$ 144,546$ 128,060$ 118,028$ 116,918$ 110,536$ 96,848$ 115,115$ 115,916$ 127,797$ 1,487,085$ 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 Total Cannabis Retail 2022 113,141$ 118,312$ 130,479$ 134,823$ 119,012$ 97,850$ 93,872$ 74,910$ 82,166$ 89,851$ 97,554$ 1,151,968$ January February March April May June July August September October November December Total Difference 2018 to 2019 31,787$ 56,142$ 29,924$ 14,512$ 33,581$ (3,535)$ 14,312$ 12,619$ (34,788)$ 4,173$ (5,889)$ 6,354$ 159,191$ Difference 2019 to 2020 11,771$ (43,842)$ (49,837)$ (49,620)$ (1,141)$ 31,262$ 41,382$ 10,000$ 20,618$ 3,724$ (19,322)$ (4,464)$ (49,470)$ Difference 2020 to 2021 (23,423)$ (9,079)$ 20,119$ 9,478$ (40,192)$ (42,491)$ (60,879)$ (38,018)$ (51,859)$ (28,470)$ (13,462)$ (24,428)$ (302,705)$ Difference 2021 to 2022 (25,762)$ (4,482)$ (21,146)$ (9,723)$ (9,047)$ (20,178)$ (23,046)$ (35,627)$ (14,682)$ (25,265)$ (18,362)$ (207,320) $ Cathedral City
Cannabis Tax Collection History
By Sector (Retail, Cultivation, and Manufacturing)
Cannabis Retail Tax Collected
Year-to-Year Difference in Cannabis Retail Taxes Collected

2.B.n
Packet Pg. 54
Attachment: 2022-12-01 Cannabis Tax Collected TABLE of RETAIL TAXES COLLECTED by Year (3583 :