The city of Desert Hot Springs is one step closer to permanently lowering its cannabis cultivation tax rate. (Canva Images)

The Desert Hot Springs City Council last week took one more step toward permanently lowering cannabis cultivation taxes in the city.

“Tonight, city staff brings forward a recommendation to permanently lower cannabis cultivation tax rates from $10.20 per square foot to $5.75 per square foot to provide financial relief to the Desert Hot Springs cannabis industry,” Christina Newsom, compliance director, said at the Feb. 20 meeting.

The move comes following previous council action to reduce cannabis cultivation taxes by 50% last April for the January through June 2023 tax collection period and again last November for the July through December 2023 tax collection period.

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“On Feb. 7 of this year, after a comprehensive analysis, the city council approved a recommendation to permanently lower cannabis cultivation tax rates,” Newsom said.

Tom Moen, a resident of Desert Hot Springs for more than four decades and frequent council attendee, said he was in favor of lowering the tax rate.

“I think that will help raise revenue for the city and that we can have bigger sales,” he said. “And if we can have bigger sales, we’ll have more jobs in Desert Hot Springs.”

According to the staff report, the lowered tax rate is expected to reduce the budgeted revenue for fiscal year 2023-2024 by $1.9 million and by $2.3 million for fiscal year 2024-2025 based on the current amount of city-defined canopy space.

The ordinance amending the city’s municipal code regarding cannabis cultivation tax  passed unanimously with no further council discussion. The ordinance is expected to come back before council for a second reading and final adoption at the March 5 meeting.

In other council action: After a heated discussion, the council voted 4-1, with Councilmember Russell Betts opposed, to accept Homeless Housing, Assistance and Prevention funds from the county to fund operations at The HUB. 

A full recording of the meeting can be found here on the city’s YouTube channel.

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