HomeMy WebLinkAboutItem 3A - Presentation0Cannabis Ordinance Amending
Section 3.42.020 and 5.55
of the Palm Springs Municipal Code
Item 3A
February 8, 2024
O F F I C E O F
S P E C I A L
P R O G R A M S Page 1 of 19
Council Direction
O F F I C E O F
S P E C I A L
P R O G R A M S
•September 26, 2023 Council received an update on several issues
related to the commercial cannabis industry in the City.
•October 26, 2023 Staff presented the State of the Cannabis and
Council provided staff direction for Ordinance revisions to Sections
3.42.020 and 5.55 of the Palm Springs Municipal Code.
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O F F I C E O F
S P E C I A L
P R O G R A M S
COUNCIL DIRECTED PROPOSED REVISIONS
Local Tax Reduce local retail gross receipts tax from 10%to 5%.
Implement a 2%gross receipts tax for transportation and
distribution.
Allocation of Cannabis Tax Revenue %amount to be determined by Council and to be used for
social good and a 1%allocation for the City’s social equity
program.
Cannabis Tax Definitions Revise the definition of “gross receipts”to clarify that the
State’s excise tax is not included.Add and define the term
“cannabis accessory”.
Cap on Retail Dispensaries Establish a cap on the number of retail dispensaries in the
City.
Criteria for Transfer of Retail Dispensaries Set forth criteria for a cannabis business to transfer
ownership.
Non-Renewal of Inactive Cannabis Permits Businesses that are not operational at the time of renewal will
not be eligible to renew their local permit.
Educational Materials for Dispensaries and Lounges Mandatory educational materials on consumption of cannabis
provided at dispensaries and lounges.
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Local Tax Revision
•Reduction of Retail gross receipts tax from 10% to 5%
•Implement a 2% Distribution gross receipt tax
•Removal of the State’s cannabis excise tax from the definition
of gross receipts calculation
•Add the definition of Cannabis Accessory, as defined by the
State’s Health and Safety Code Section 11018.2
O F F I C E O F
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P R O G R A M S Page 4 of 19
O F F I C E O F
S P E C I A L
P R O G R A M S Page 5 of 19
Retail Cap
•The Department reviewed cities in Coachella valley as well as seven other top tourist
cities in California.
•These cities are listed in the Staff Report starting on Page 5
•Our goal was to:
•Research policies on how other municipalities approached limiting or setting caps
on retail cannabis dispensaries.
•Compare this to The City of Palm Springs current retail dispensary quantities of
businesses, per capita (10,000 population) and ratio per person.
•Apply a scenario based on findings.
O F F I C E O F
S P E C I A L
P R O G R A M S Page 6 of 19
O F F I C E O F
S P E C I A L
P R O G R A M S
Retail Cap
•The City of Palm Springs retail dispensary overview:
•35 Dispensaries
•26 operating
•1 pending
•8 permitted, not operating
•Per capita of 7.77 per 10,000 population (5.77 if looking at the 26
only)
•Ratio of 1:1,286 persons (1:1,731 if looking at the 26 only)
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O F F I C E O F
S P E C I A L
P R O G R A M S
Retail Cap
•Population approach of 1:17,500 (City of Indio)
•Palm Springs limit on retail dispensaries would be 2 to 3
•Indio per capita .55, ratio 1:8,510
•Population/Identified area approach of 1:10,000 (City of Los Angeles (Community Plan Areas)
•Palm Springs limit on retail dispensaries would be 4 to 5
•Los Angeles per capita .63, ratio 1:15,904
•Area Specific Approach Council Districts ( City of San Diego [4 limit] and Chula Vista[2 limit])
•Palm Springs limit on retail dispensaries would be 10 to 20
•City of San Diego per capita .26. ratio 1:38,388
•City of Chula Vista per capita .27, ratio 1:34,652
•Separations and concentrations of use (City of San Jose states that the proposed location would not lead to
a grouping of more than four uses within a 1,000-foot radius)
•Palm Springs limit on retail dispensaries is undetermined
•City of San Jose per capita .15, ratio 1:65.565
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O F F I C E O F
S P E C I A L
P R O G R A M S
Additional Proposed Revisions
•Criteria for Transfer of Retail Dispensaries
•Non-Renewal of Inactive Cannabis Licenses
•Educational Materials for Dispensaries and Lounges
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O F F I C E O F
S P E C I A L
P R O G R A M S
Establish criteria for businesses
transferring retail permits
a.Business must be operational for two years;
b.Must be in compliance with all State and Local regulations;
c.Business must be in good standing, i.e. Local taxes,
Business License; Annual Renewal.
Non-Renewal of inactive permits
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O F F I C E O F
S P E C I A L
P R O G R A M S
Educational Materials
on safe consumption at
retailers and lounges.
Information to help consumers
understand how cannabis can help
them achieve their consumption
goals, whether medical or
recreational.
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O F F I C E O F
S P E C I A L
P R O G R A M S
Outreach and Feedback
•Staff outreach efforts consisted of surveys,
interviews, and communication with local
Coachella Valley cities.
•Staff collected information related to proposed
revisions and industry concerns.
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•The surveys identified the top two challenges of local operators as
taxes and oversaturation.
•Operators supported a retail cap and recommendations ranged from
a low of five (5) to a high of 35. The majority recommendation was ten
(10).
•Additional items of concern included State taxes, Federal prohibition,
limited access to banking and capital, illegal operations, code
compliance and local permitting fees.
O F F I C E O F
S P E C I A L
P R O G R A M S
Stakeholder Feedback
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O F F I C E O F
S P E C I A L
P R O G R A M S
Local Concerns - Permitting Fees
•The current cannabis fee was adopted in 2021. The fee was adopted to include all departmental fees
related to the administration and enforcement of the City’s cannabis program.
•Pursuant to Government Code Section 66020, the permit fee does not exceed the reasonable cost of
providing the service. The fee breakdown was presented to Council on April 22, 2021. The fee of $10,984
was determined on the complete cost of Cannabis Regulatory Compliance and Administration.
Cannabis Operations FY 2021/2022
Personnel (Existing Special Programs staff) $ 130,454
Personnel (Existing Police / Code Compliance staff) $ 72,463
Personnel (Existing Finance Department staff) $ 111,889
Personnel (New Code Compliance Officers) $ 249,697
Materials, Services, and Supplies $ 87,899
Vehicles $ 40,000
Special Charges $ 43,500
Total Estimated Department Budget $ 735,902
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O F F I C E O F
S P E C I A L
P R O G R A M S
Local Concerns – Code Compliance
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O F F I C E O F
S P E C I A L
P R O G R A M S
July 2017 –
Ordinance 1933
Adoption
October 2021 – Amended
Reg to Introduce &
Establish a fine schedule
by violation type
Resolution No. 24946
January 2022 –
Cannabis Code Officer
Position Filled
January 2022 – April 2022
Compliance Outreach,
Baseline Compliance
Inspections, Collaboration
to provide education and
correct misinterpretations
April 20, 2022 –
Communicated date of
expectation of
compliance with all
operating requirements
July 2017 Now
April 2021 –
Council Approved
Cannabis Code
Officer Position
beginning FY 21-22
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O F F I C E O F
S P E C I A L
P R O G R A M S
•Data Captures Dates From January 2023 – January 2024
•Retail – 75%
•Distribution – 9%
•Cultivation – 10%
•Manufacturing – 6%
•From July 2017 – August 2023 these inspections were conducted by
PSPD. Beginning in September 2023 this responsibility shifted over to
CODE
•Data Captures Dates From January 2022 – January 2024
•Retail – 74%
•Distribution – 11%
•Cultivation – 8%
•Manufacturing – 7%
•Prior to January 2022 Code Compliance did not have an established
operational inspection process or reporting method that was specific to
Cannabis Enforcement that could establish any reliable data
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O F F I C E O F
S P E C I A L
P R O G R A M S
•Data Represents Dates From April 2022 – January 2024 at
Retail/Dispensaries
•In Compliance – 85%
•Compliance Findings – 15%
•Inspections are generally brief and typically focus on one or
two operational compliance topics.
•Data Represents Dates From April 2022 – January 2024 at
Retail/Dispensaries
•Employee Rosters Not Updated
•PSMC 5.55.200 (A)22 & 21 // CCR 15017
•PSMC 5.55.200(A)3 / PSMC 5.55.200(A)15
•Inventory
•PSMC 5.55.200(A)5 // CCR 15047.2
•Sales Transactions
•PSMC 5.55.080(F)14 // CCR15403
•Advertising
•CCR15040
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O F F I C E O F
S P E C I A L
P R O G R A M S
•Data Represents Dates From August 2021 – January 2024
•Notice of Violation w/ Citation– 64%
•Courtesy Notice – 36%
•All but one of the events which generated enforcement
action took place after April 20, 2022.
•Data Represents Dates From August 2021 – January 2024
•Serious Violations
•Undocumented Cultivation Activity
•Records not properly maintained
•Dispensing Free Cannabis
•Improper/Unsecured Storage of Product
•Failure to Comply With Odor Control Plan
•Minor Violations
•Prohibited Signage
•Unpermitted Outdoor Vendor Exhibit
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