Like it or not, the cannabis industry has been lucrative for Cathedral City

CATHEDRAL CITY — With the passage of Proposition 64 by California voters, cannabis businesses have become fully legal for medical and adult use. Full implementation of Prop 64 went into effect on January 1, 2018. The industry continues to grow and mature in Cathedral City.

In calendar year 2021, total cannabis taxes paid in Cathedral City were $4.9 million, according to a staff report prepared by City Manager Charles McClendon. Retail cannabis taxes collected in 2021, however, decreased from the previous year.

Cathedral City is not alone. The demand for cannabis is increasing.

According to Flowhub and Gallup, only 12% of American adults were active cannabis users in 2019, leaving significant room for growth. Cannabis sales nationwide are up 67% in 2020 and support for legalization is at an all-time high of 68%. About 14% of American adults reported using CBD for issues such as pain, anxiety, sleep issues, arthritis, and headaches. According to Marijuana Business Daily, experts predict that the cannabis market will continue to grow, given the designation of cannabis businesses as “essential” during the pandemic, and the fact that investor interest remains high.

In this context, the city council will meet in special session on Wednesday to discuss the cannabis regulations and the tax update. The meeting begins at 2 p.m. in the City Council Chamber, 68-700 Avenida Lalo Guerrero. This item is presented for information, discussion and guidance only, as per the agenda.

So how did the city council get here?

On September 8, 2021, staff provided an update to City Council during its study session, covering the history of tax collections in Cathedral City and discussed a request from a business owner to consider a “tax holiday” for retail. At that time, the city council
refused to take a tax holiday.

But could a tax break now be on the horizon?

A tax holiday is a government incentive program that provides a temporary reduction or elimination of taxes for consumers or businesses. State tax holidays typically last two to seven days, according to a list compiled by the Federation of Tax Administrators.

Following the last Cannabis Working Group meeting held on November 29, 2021, staff provided an update to City Council at the January 12, 2022 study session and reviewed the working group discussions. . As a result of this meeting, Council directed staff to conduct a comprehensive review of the City’s Municipal Code provisions relating to cannabis, the tax and fee structure and related data.

The data and staff suggestions resulting from this review were presented to the Cannabis Task Force at a meeting on April 11, 2022. All Task Force members were present for the discussion and key topics of the meeting. will be reviewed with the Board during the presentation on this item on Wednesday.

The city council could seek to clean up and clarify the language in the existing ordinance. It could also look at inspection issues, enforcement and more.

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