Desert Hot Springs to lower cannabis tax by 43%

Desert Hot Springs is reducing its cannabis cultivation tax by 43.6% to help relieve some of the financial pressure on the industry.

The city council unanimously voted on Tuesday to lower the tax from $10.20 per square foot to $5.75 per square foot. This decision comes after several meetings dedicated to the topic and temporary tax cuts.

How has the cultivation tax rate changed over time?

The cultivation tax was $10.20 per square foot, but the council temporarily reduced it to $5.20 for six months and then $7.50 for another six months. Now it will be set at $5.75 per square foot.

Why did the city reduce the tax?

Cannabis business owners throughout the Coachella Valley have said they are facing financial hardship. Some of the problems they've said they face include high taxes, an oversaturated market and having to compete with a cheaper black market.

Cities like Cathedral City, Palm Desert and Palm Springs have cut their cannabis retail taxes in response to these concerns.

What's next?

The council gave direction to have city staff create an ordinance lowering the cultivation tax on Feb. 6. But there were a series of other changes it also supported, including a new annual cannabis license fee of $5,775 that excludes dispensaries, tax payments monthly instead of every six months and adding the ability to make spaces where customers can use cannabis products called consumption spaces.

The council will consider those changes over the course of its next few meetings, according to Deputy City Manager Doria Wilms.

Ani Gasparyan covers the western Coachella Valley cities of Desert Hot Springs and Cathedral City. Reach her at ani.gasparyan@desertsun.com.

This article originally appeared on Palm Springs Desert Sun: Desert Hot Springs to lower cannabis tax by 43%