Palm Springs / Coachella Valley: Candidates Running For City Council Debate Cannabis Taxation

It’s been about two years since Palm Springs started issuing permits for commercial cannabis retail and cultivation, but debates on how to tax the industry and manage its growth remain unsettled.

On Thursday evening, eight candidates running for the three Palm Springs City Council seats up for election in November sparred over taxation, zoning and regulation at a forum hosted by the Coachella Valley Cannabis Action Network, a group that represents the interests of the local cannabis industry.

The Nov. 5 election in Palm Springs will be the first since council voted last year to switch from at-large districts to by-districts.

Residents in District 1, which wraps around the eastern side of the city, spanning from North Palm Springs to Desert Highland Gateway Estates neighborhood in northern Palm Springs to Demuth Park in southern Palm Springs, District 2, which spans from the Little Tuscany neighborhood in northwest Palm Springs to Sunrise Vista Chino near the airport, and District 3, which spans from Vista Chino to Ramon Road and contains a majority of downtown Palm Springs, will elect representatives this year, while residents of the remaining two districts will vote in 2020.

The race is made up mostly of first-time candidates. Aside from Mayor Pro Tem Geoff Kors, who is running in District 3, no other incumbent is running in this year’s race.

Three candidates running on business-friendly platforms set themselves apart from the pack at the beginning of the forum with their forceful critiques of the city’s cannabis tax rate.

In addition to the 15% cannabis excise tax California adds to all consumer purchases, Palm Springs levies an additional 10% on cannabis retail. It also taxes manufacturers 2% and cultivators $10 per square foot. In Feburary, the council eliminated the taxes on transportation and testing, in order to compete with neighboring cities like Desert Hot Springs, where taxes are lower.

Scott Myer, a lawyer running in District 1; Adrian Alcantar, a hair salon owner running in District 2; and Les Young, a retired businessman running in District 1, said, if elected, they would push to lower the tax rates on cultivation, manufacturing and sales.

Myer said taxes needed to be “in line with the actual city services businesses are using,” rather than a revenue boon that stem budget shortfalls and said, as council member, he would advocate for first-year waivers that would encourage people selling on the underground economy to enter the legal market.

“We have to look at whether there’s justification to keep the cannabis tax so much higher than other businesses,” Myer, a libertarian, said.

Alcantar said the city’s tax policy was hurting local businesses and empowering people selling without city and state permits.

“As a business owner I would want to be taxed fairly and I would support like-minded taxes like the current system most of our businesses pay,” he said. “The only reason the illegal market continues to thrive is because it’s cheaper than walking into a retail store and that’s because of the taxes that’s in play,” he said.

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