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US (CA): Palm Desert lowers cannabis taxes as industry faces falling sales and booming black market

After a few owners of local cannabis businesses spoke about their struggles to remain viable in a saturated and increasingly competitive market, the Palm Desert City Council recently agreed to cut some of the industry's taxes.

The council's unanimous vote comes as other cities in the Coachella Valley, including Cathedral City and Palm Springs, have discussed how to ease the economic burden that cannabis business owners say they're facing as the number of competitors has grown, but overall sales have gone down.

Starting March 1, Palm Desert will reduce its taxes on cannabis cultivation from $13 to $10 per square foot, while its tax rate on retail and delivery sales will be cut in half, from 10% to 5% of gross receipts. The changes are similar to ones the Cathedral City Council is expected to consider next week.

While Palm Desert has limited its number of cannabis permits, allowing six dispensaries and just a couple of cultivators and manufacturers, there are approximately 207 other cannabis operations — of which roughly a third are storefront dispensaries — in the Coachella Valley and nearby unincorporated areas, according to the city's 2022 Cannabis State of the Industry report.

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