California: In-depth look at Palm Desert's cannabis business tax

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Palm Desert’s Measure Q creates a three-tier taxation plan for cannabis sales that could result in an additional $6 million. That money will go towards city services including the police and other local agencies that assist in enforcing marijuana laws and regulations

“Just recognize that Prop 64 has passed and that recreational cannabis is legal in the state the goal to make a revenue stream that the city could use for the potential impacts of prop 64,” said Ryan Stendell, director of community development for Palm Desert. If passed, tax cultivation would be taxed from a range starting at $13 and up to $20 per square foot. Retail and delivery sales would receive an additional 10 percent tax expandable up to 15 percent that is added on top of the city’s existing 8.75 percent sales tax and taxing manufacturing by 2 to 3 percent. “The measure sets a range of taxation, the city council can react to market conditions," Stendell added. Stendell added that the council can modify the tax approved by voters.

Ken Churchill, the owner of the 'West Coast Cannabis Club' dispensary in Cathedral City, is building a new shop on Highway 111 in Palm Desert. He told KESQ & CBS Local 2 the proposed max tax rate would cost the consumer an extra three and a half dollars for every $10 spent.

“Then that's really significant and it's higher than the rest of the valley. Now where they’re starting those taxes are more in line. Of course, I’m for us having some responsibility when it comes to taxes I’m a little bit nervous that there is that ability to raise the taxes to a pretty extreme level.” Churchill said.

The tax plan would create $3.6 million at the recommended level and up to $6 million at the max level for the five licensed cultivation businesses and the six city approved dispensaries. “It's one of those things, you’re not going to hear me complain if we don’t have to pay the tax, I’m a business owner, I think its fair to the community that we put in our share,” Churchill said.

“There are plenty of firms that talk about the cumulative tax rate that you can tax any industry before it goes to any underground black market…we think that we set our taxation structure competitively enough that it won’t inhibit business,” Stendell said.


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