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CC - ACTION ITEM: (1) Discussion of Whether to Reduce the Cannabis Business Tax Rate for Cannabis Distribution from 2% To 0%; and (2) Direction to the City Manager as Deemed Appropriate.
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Meeting Date: September 11, 2023
Contact Person/Dept.: Jesse Mays/City Manager's Office
Phone Number: (310) 253-6000
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments: Yes [X] No []
Public Notification: (E-Mail) Meetings and Agendas - City Council (09/06/2023); Cannabis (09/05/2023)
Department Approval: John Nachbar, City Manager (09/05/2023)
RECOMMENDATION
Staff recommends the City Council (1) discuss whether to reduce the cannabis business tax for cannabis distribution from 2% to 0%; and (2) provide direction to the City Manager as deemed appropriate.
BACKGROUND
At its meeting on August 28, 2023, in response to a request by a representative from a permitted Culver City cannabis manufacturing, distribution, and delivery-only retail business, the City Council requested that staff agendize a discussion of whether to lower the cannabis business tax rate from 2% to 0%.
On the April 10, 2018 municipal election ballot, Culver City voters approved Measure A, a cannabis business tax. The ballot measure added Chapter 11.32 to the Culver City Municipal Code, which governs the cannabis business tax. The initial and maximum rates for the tax, as approved by voters, are as follows:
* Retail (medicinal): range of 5 -8% with an initial rate of 5%
* Retail (adult-use): range of 6-10% with an initial rate of 6%
* Manufacturing: range of 4-6% with an initial rate of 4%
* Distribution: range of 2-6% with an initial rate of 2%
* Testing: 1-1.5% with an initial rate of 1%
* Cultivation: $12 per square foot of canopy
The initial rates were put in place for a minimum of two years, after which they have been able to be adjusted by City Council resolution. Cultivation rates were to be adjusted according to the consumer price in...
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