Local cannabis business owners pressed Cathedral City officials during a special meeting on Wednesday to consider changes to the city’s cannabis regulations and taxes or risk losing the industry to surrounding cities. Cannabis businesses in Cathedral City collectively paid a total of $4,971,001 in taxes in 2021. By comparison, Coachella earned about $1.9 million in cannabis tax revenue that same year.
Cathedral City charges a 10% retail tax on gross proceeds — the same as Desert Hot Springs, Palm Springs and Palm Desert. Coachella has the lowest in the Coachella Valley at 6%. If Cathedral City were to lower its retail tax, the city would lose around $150,000 in tax revenue per 1% reduction, according to a city staff report.
It also charges a cultivation tax of $15 per square foot of the entire facility, and a manufacturing tax of $0.05, $0.10 or $0.40 per gram, depending on the type of cannabis concentrate. Some cities only charge cultivation tax on the canopy space of a facility. If Cathedral City followed suit, it would lose around $246,000 to $369,000 in tax revenue annually, according to the city staff report.
But several people in the cannabis industry spoke during the public comment portion of Wednesday’s meeting to say these taxes are putting a strain on businesses. Kenneth Churchill, CEO and co-founder of West Coast Cannabis Club, said Cathedral City is going to lose the industry to surrounding cities if it doesn’t address this.
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