HomeMy WebLinkAboutCC Reso 2019-02 RESOLUTION NO. 2019-02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL
CITY, CALIFORNIA, ADJUSTING THE CANNABIS TAX BASIS FOR
CANNABIS DISPENSARIES PURSUANT TO SECTION 3.48.040 OF THE
CATHEDRAL CITY MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY FINDS:
A. The voters of Cathedral City approved Measure N at the November 2014
general municipal election establishing a tax on the proceeds of cannabis businesses as
defined in Measure N in a maximum amount of 15% of proceeds.
B. Measure N authorized the Council to set the tax at a rate that is less than
15% and to establish exemptions, incentives, or other reductions.
C. Resolution 2015-50, adopted August 26, 2015, set a tax rate of 10% for
each medical cannabis business that received or receives from the City a permit to
operate a medical cannabis business or cooperative in the City.
D. At the time Measure N was approved, dispensaries were the only type of
medical cannabis business permitted in the City. Subsequently, the City Council has
substantially changed the City's regulation of medical cannabis businesses, and
expanded the types of medical cannabis businesses that are allowed in the City.
E. The City Council placed Measure P on the November 2016 ballot to amend
the tax on cannabis businesses to include different tax rates for medical cannabis
cultivation and manufacturing, among other things.
F. The voters approved Measure P, which imposes the following taxes on
medical cannabis businesses in the City:
• Fifteen cents for each one dollar of gross receipts or fractional part thereof
received by a dispensary or by any other cannabis business for activities
other than cannabis cultivation or manufacturing.
• Twenty-five dollars for each square foot or fractional part thereof of
cannabis cultivation space.
• One dollar for each gram of cannabis concentrate produced or
manufactured.
• One dollar for each unit of cannabis-infused product other than cannabis
concentrate produced or manufactured and packaged or intended for
individual sale.
G. Measure P continues to authorize the Council to set the taxes on medical
cannabis at lower rates than what was approved by the voters, and to establish
exemptions, incentives, or other reductions.
H. On April 26, 2017, the City Council adopted Resolution No. 2017-13
lowering the cannabis tax rates to:
• Ten cents for each one dollar of gross receipts or fractional part thereof
received by a dispensary or by any other cannabis business for activities
other than cannabis cultivation or manufacturing.
• Fifteen dollars for each square foot or fractional part thereof of cannabis
cultivation space.
• Forty cents for each gram of cannabis concentrate produced or
manufactured.
• Forty cents for each unit of cannabis-infused product other than cannabis
concentrate produced or manufactured and packaged or intended for
individual sale.
On October 10, 2018, the City Council adopted Resolution No. 2018-46
further modifying the cannabis tax rate applicable to cannabis concentrate to establish
different rates for crude concentrate (5 cents per gram), distillate (10 cents per gram),
and exotic/boutique concentrate (40 cents per gram).
J. The City Council desires to adjust the basis upon which the gross receipts
tax on dispensaries are calculated so that the tax is calculated based on the gross receipts
from the sale of cannabis or cannabis-infused products, and not on any gross receipts
received from the sale of non-cannabis merchandise.
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY RESOLVES:
SECTION 1. For the purpose of calculating the Cannabis Tax due and payable
from a dispensary, the "gross receipts" of the dispensary shall be defined to include the
total amount actually received or receivable from all sales of cannabis and cannabis-
infused products. Amounts received from the sale of other products shall not be subject
to the Cannabis Tax.
SECTION 2. Except as otherwise provided in Section 1 of this Resolution, all
definitions in Chapter 3.48 of the Code shall apply to this Resolution.
SECTION 3. This Resolution shall take effect on March 1, 2019.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council
of the City of Cathedral City held on this 27th day of February, 2019, by the following vote:
Ayes: Councilmembers Gutierrez and Gregory; Mayor Pro Tem
Aguilar and Mayor Carnevale
Noes: None
Absent: None
Abstain: None
Mark •=rnevale, -yor
ATTEST:
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Tracey R. Martinet, City Clerk
APPROVED AS TO F•RM:
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Eric S. Vail, City Attorney