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1 RiversideCA.gov1
RiversideCA.gov
City CouncilOctober 22, 2024RESOLUTION ADOPTING CANNABIS BUSINESS TAXFINANCE DEPARTMENT RiversideCA.gov2
BACKGROUNDFebruary 2023: Adopted Ordinance to replace Chapter 5.77 of the Riverside Municipal Code (RMC) – regulates Cannabis Business Activities in the CityOctober 2023: Adopted Storefront Retail Commercial Cannabis Business Permit Procedure Guidelines and Application Review CriteriaOctober 2023: Adopted Ordinance to amend Chapter 3.30 of the RMC to add additional category to Schedule of Regulations, Products and Services and Resolution to amend City’s Fees and Charges related to Storefront Retail Cannabis1 2 10/8/2024
2 RiversideCA.gov3
BACKGROUNDNovember 2023: Adopted Resolution calling for municipal election to place Cannabis Business Tax Measure on Ballot up to 10% of gross receiptsNovember 2023: Adopted Ordinance adding Chapter 5.78 of the RMC (Cannabis Business Tax) to be operative and enforceable upon voter approvalApril 2024: Adopted Resolution declaring results of election to include voter support of Ballot Measure B, “Cannabis Business Tax” RiversideCA.gov4
CURRENT RATE STRUCTURE•Voter approved Cannabis Business Tax maximum rate for all businesses set at 10% •Cannabis Business Tax in addition to:–15% California Cannabis Excise Tax–8.75% Sales Tax•RMC Section 5.78.080: Authority to implement, by resolution, a lower tax rate for all cannabis businesses or establish differing tax rates for different categories of cannabis businesses 3 4
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3 RiversideCA.gov5
CANNABIS TAX RESEARCH* The County does not have a voter approved tax – requires public benefit fees and development agreement RiversideCA.gov6
CANNABIS TAX RESEARCH
Range: 4% - 15%Average: 8%Potential impacts of ratesLower ratesHigher ratesBusiness growthHigher sales volumeLower revenuesMaximize revenuesDeter businessLower sales volume 5 6
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4 RiversideCA.gov7
CANNABIS TAX RESEARCH
Cathedral City, 5%Coachella, 6%Corona, 7%Desert Hot Springs, 10%Moreno Valley, 8%Palm Desert, 5%Palm Springs, 10%Perris, 10%Pomona, 6%San Bernardino, 4%San Jacinto, 15%0%2%4%6%8%10%12%14%16% $- $10 $20 $30 $40 $50 $60 $70 $80 $902023 Retail Tax Rate vs. Total Sales ($Millions) RiversideCA.gov8
CANNABIS TAX RESEARCH
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5 RiversideCA.gov9
NEXT STEPS•Upon approval, 8% Cannabis Business Tax effective immediately•Detailed implementation plan:- Implementation of Riverside Municipal Code Chapter 5.78 (Cannabis Business Tax) - Development of cannabis business license tax registration form & cannabis business tax remittance form- Development of audit compliance requirements- Public communication with retail storefront businessesIMPLEMENTATIONNEXT STEPS•Recommend future evaluation of Cannabis Business Tax rate for non-retail businesses (manufacturing, distribution, testing)–Upon development of permitting process for non-retail cannabis businesses RiversideCA.gov10
STRATEGIC PLAN ALIGNMENT
STRATEGIC PRIORITY 5 - HIGH PERFORMING GOVERNMENTCROSS-CUTTING THREADS Equity
Innovation
Community Trust
Fiscal Responsibility
Sustainability and ResiliencySTRATEGIC PRIORITY 3 - ECONOMIC OPPORTUNITY 9 10
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6 RiversideCA.gov11
RECOMMENDATIONSThat the City Council:1. Adopt a resolution adopting the previously approved Cannabis Business Tax at the rate of eight percent (8%) of gross receipts of all engaged in cannabis businesses in the City; and2. Authorize the City Manager, or his designee, to implement the Cannabis Business Tax at the rate of eight percent (8%) of gross receipts of all engaged in cannabis businesses in the City.11