DATE:
October 18, 2022
TO:
Mayor and Council Members
FROM:
Nils Bentsen, City Manager
BY:
Pam Lee, City Attorney
SUBJECT:
Cannabis Tax Rate Resolution
RECOMMENDED ACTION
It is recommended that the Council review the report and resolution, then consider adopting Resolution No. 2022-74 revising the percentage of tax to be assessed on commercial cannabis businesses.
BACKGROUND
The City currently provides for a cannabis regulatory program pursuant to Hesperia Municipal Code Chapter 3.18 (Cannabis Business Tax), Chapter 5.50 (Business Licenses and Regulations) and Title 16 (Development Code). The program establishes certain limitations on personal cannabis cultivation and prohibits commercial cannabis activities, with the sole exception of medical cannabis delivery operations under state license classification M-9 (Non-Storefront).
Measure T was approved by the voters in 2018 and authorized the City Council to adopt by resolution a tax rate of 1% to 6% on commercial cannabis businesses. On December 18, 2018, the City Council adopted Resolution No. 2018-17 setting the tax rate at 4%.
On September 20, 2022, the City Council directed staff to bring back items to consider (i) changing the tax rate; and (ii) repealing the cannabis regulatory program in its entirety. This report and attached Resolution concern the tax rate.
ISSUES/ANALYSIS
Sections 3.18.020(E) and (F) allow the City Council to adjust the tax rate at any time without voter approval, provided the tax rate does not exceed the maximum rate of 6% or is less than the minimum rate of 1%. The attached resolution is presented for the Council’s consideration to adjust the tax rate.
FISCAL IMPACT
Adoption of this resolution will change the amount of tax collected from existing commercial cannabis operations.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Resolution No. 2022 -74
01071.0032/825302.1
Page PAGE 2 of NUMPAGES 2
Staff Report to the City Council
Cannabis Tax
October 18, 2022
01071.0032/825302.1
City of Hesperia
STAFF REPORT