Desert Hot Springs plans to lower taxes for cannabis growers. Here's what to know
Desert Hot Springs is planning to make several changes aimed at boosting the city's cannabis industry, including a permanent tax cut and allowing dispensaries to create spaces for customers to consume the products on site.
On Tuesday, the city council unanimously voted to have staff create on ordinance that allows the consumption spaces, reduces the tax for cultivation and adds a new license fee.
The council has been flirting with lowering cannabis taxes for some time. It has temporarily lowered taxes for cultivation and voted to have city staff draft an earlier ordinance that would have reduced that tax long term. But it later approved the ordinance in October without permanent tax changes to allow newly hired City Manager Frank Luckino a chance to make suggestions.
How is the tax for cultivation changing?
The city's tax for cultivation is $10.20 per square foot, but it was temporarily reduced to $5.20 and then to $7.50. The ordinance would permanently lower it to $5.75 and require monthly tax payments instead of every six months.
What else is in store for the cannabis industry?
Cannabis businesses will be able to create consumption spaces under the ordinance. These are spaces where people can buy and use cannabis, such as lounges.
All cannabis businesses will have to pay a new annual cannabis license fee of $5,775 if the changes are approved, but this excludes dispensaries. The city would require cannabis businesses to connect to a system called Monarch, which Luckino said is an electronic collection service that can bring in sales data.
Dispensaries would be limited to 500 square feet for cultivation. Luckino said the city now allows them to grow up to 99 plants, but wants to regulate the space instead to give businesses more flexibility.
Other changes coming are adding an allowance for lost crop, that businesses must apply to pay in installments if they can't pay all their taxes at once, and late fees and interest will be tacked on to past-due tax bills. It wasn't immediately clear from the staff report how the lost crop allowance will work.
What's next?
The council will vote on the ordinance on Feb. 20, according to a city staff report.
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: What to know about tax cut for cannabis growers in Desert Hot Springs
