City Council
MEETING DATE: 3/22/2017
TITLE:
Title
Report from the Cannabis Task Force
End
FROM:
Charlie McClendon, City Manager
RECOMMENDATION:
Recommendation
This item is provided for information, discussion and direction only.
Body
BACKGROUND:
Section 5.88.140 of the Municipal Code established the Cannabis Task Force and prescribes the composition of its membership. The ordinance provides for the appointment of the task force by the City Manager. After an open application period the appointments were made and were reported to the City Council on December 14, 2016. The members of the task force are:
-Charlie McClendon, City Manager
-Pat Milos, Community Development Director
-Paul Wilson, Fire Chief
-Commander Paul Herrera, Police (replacing original appointee Glen Haas)
-Roger Culbertson, resident and patient
-Robert Hargreaves, Mayoral appointment
-Alice Daby, resident at-large
-Maria Scagliotti, Dispensary owner
-Scott Lambert, Cultivation owner
-Bernard Steimann, Manufacturing owner
The task force met for the first time on January 9, 2017 and held additional meetings on February 13 and March 13.
Council asked the task force to discuss and provide feedback on a number of topics including tax rates for cultivation and manufacturing businesses, zoning districts north of I-10 where cannabis businesses might be allowed, comments received from the Planning Commission and the moratorium on additional dispensary applications. A moratorium is currently in effect having been adopted on November 23, 2016 and extended for up to six months on December 14, 2016.
DISCUSSION:
The task force met three times since the first of the year. There was time spent on general introductions, the roles of individual members related to the cannabis industry, and general concerns regarding the state of the industry in Cathedral City. The task force members have interacted with each other in a thoughtful and respectful manner and have learned from the perspectives of other task force members. The primary discussion areas are outlined as follows:
1. Zoning
The task force members were provided with a zoning map and quite a bit of time was spent identifying the zoning districts where the various types of cannabis businesses are allowed and where they are not allowed. They also discussed the effect of zoning on causing a certain amount of clustering since businesses must locate only in the zones in which they are allowed. They also discussed the north city area and whether cannabis businesses should be allowed in the MU-U and BP zones in the area north of I-10. The general consensus was that it is advisable to expand the allowable uses in those districts to include cannabis businesses as this would be ground up development which might spur further development in the area and allowing those uses in the north is preferable to further expansion and concentration in the remainder of the city.
2. Separation Requirements, Signage, and Related Provisions
The task force members were provided with the concerns coming from the Planning Commission (these were provided to Council previously) and were also provided a copy of the comments read by task force member Roger Culbertson at the Council meeting on February 8, 2017. The task force discussed the advisability of separation requirements from other businesses, particularly those whose customers include children and youth. There were concerns over enforceability and the practical effect of such requirements given the number of businesses already permitted or presently in the process of being permitted. Some separation provisions, such as separation from Parks seemed unnecessary since parks are in residential zones where the businesses are already prohibited. There was also significant discussion regarding separation requirements among dispensaries. There was some support for this concept, but also a recognition of the practical problems resulting from the number of permits already issued or in progress. The task force did not agree that cultivators and manufacturers should have to provide indentifying signage, agreeing that these businesses instead should be discouraged from having excessive signage.
3. Taxes
One of the topics of discussion that occupied a significant amount of time was taxes. There was an understanding among the task force members that the City needs to diversity its revenue stream and that the cannabis industry may help that diversification to occur. On the other hand there was an understanding that the City must be competitive in the taxes charged or businesses may have an incentive to relocate to lower tax jurisdictions. Of particular concern were the taxes on cultivation and manufacturing businesses. There seemed to be a general consensus that taxes on dispensaries need only be competitive within the Coachella Valley as retail customers are unlikely to drive a long distance for lower taxes. Most members seemed to feel that current dispensary taxes, 10% of gross proceeds, are in line with those charged in Palm Springs and Desert Hot Springs, our closest competitors. There was a concern expressed by industry representatives that the cultivation tax at $25 per square foot is higher than other local cities and that the competitive market place for cultivators is much larger and includes the Los Angeles area. Industry representatives also expressed that the tax on manufacturing is high at $1.00 per gram and will likely limit manufacturing activity in Cathedral City. The task force also discussed the voter approved tax measures and how the city must tax businesses within the parameters established by the voters. There was also a discussion of the possible role of development agreements in offsetting some of the costs associated with bringing infrastructure to newly developing areas north of I-10 and as a possible way to mitigate the tax burden in exchange for long term commitments to the City.
4. Dispensary Moratorium
There seemed to be general support for making the moratorium on new dispensaries permanent in the area south of I-10. The feeling was that there will be more than enough licenses to meet the demand in that area once all in progress applicants are completed.
FISCAL IMPACT:
None with this report. Future actions to adjust tax rates would have a fiscal impact, which will be calculated at the time.
ATTACHMENTS:
Bernard Steimann comments and comparison data
Green Cross Pharma comments
Roger Culbertson comments
Planning Commission comments
North City Zoning Map