At its meeting Wednesday night, March 23, the Cloverdale City Council will undertake three regular business items — discussing a “military use policy” as required by state law, consider conducting a rate review of Recology’s special rate adjustment and consider modifying the city’s tax rate for cannabis businesses to one that’s tiered instead of across the board.
The council meeting begins at 6 p.m. and is being held both in-person at the Cloverdale Performing Arts Center or online via Zoom and YouTube. More details about the council agenda, as well as how to participate, can be found here.
To go with tiered taxes?
As it stands, the City of Cloverdale has a 4.5% tax rate on gross receipts of cannabis businesses. However, local cannabis businesses are requesting that the city amend its tax to a tiered rate based on the type of cannabis business.
The council was asked to change the tax structuring during a March 9 presentation to the Cloverdale City Council by Erin Gore, founder and CEO of Cloverdale-based Garden Society, and Diana Schraner, co-owner of Red Door Remedies.
“The cannabis industry is in a freefall right now. It’s in a state of extreme distress,” Gore said, noting that multiple cannabis businesses in Santa Rosa have closed their doors and that another business in Hopland is in the middle of liquidating their assets.
According to Gore, cannabis retailers shrunk 20-40% in the fourth quarter of 2021 and prices for cannabis fell from roughly $900 per pound to around $125.
According to Wednesday’s council agenda, the tiered rate requested is:
● 3% for Cultivation
● 1% for Manufacturing
● 1% for Distribution
● 3.5% for Retail (Storefront and non-storefront)
Changing the tax structure, Gore said, would help provide immediate relief for Cloverdale’s local cannabis industry.
“Other industries in Cloverdale are not taxed like this — I think it’s imperative that you recognize this is not a normal business tax. This is not a normal alcohol excise tax. This is not a normal timber tax. This is something dramatically higher than any other industry and very specific to cannabis, which we find needs to be changed,” Gore said.
During the March 9 meeting, Councilmember Joe Palla asked city staff to come back with numbers that try to predict what the impact to city revenue would be, should the council adopt a tiered tax rate.
Other council items
In addition to discussing Recology’s rate adjustment application and discussing Assembly Bill 481’s “military use policy,” the council is also slated to issue proclamations for Cesar Chavez Day, the Equal Pay Act and Women’s History Month.
