4/20 cannabis tax showdown: Business owners call for city tax cuts

Valley cannabis business owners are pleading with local leaders to reduce hefty taxes they say are crippling small businesses – and it's playing out on the industry's biggest day of the year, 4/20.

"We’re literally telling them that we need to do something in this city before we lose the cannabis industry entirely," said Kenneth Churchill, CEO of West Coast Cannabis Club.

Right now in western valley cities Palm Springs, Desert Hot Springs, Cathedral City and Palm Desert, the city tax is 10% of proceeds.

In Coachella, the city tax is 6%.

Kenneth Churchill, CEO of West Coast Cannabis Club, has 3 locations in Palm Desert and Cathedral City. He said the local tax burdens are threatening to shutter small businesses, which must also pay a 15% state tax and 8% sales tax.

"A good majority of them just don't think they'll be able to survive another year if we don't find some kind of tax relief," Churchill said. "I do know of at leas two dispensaries locally who have shut down. I know another one who's on their way out," he said.

At a Cathedral City cannabis task force meeting Wednesday, Churchill was among other business owners and representatives who called on city leaders for relief. "Working with the city to come up with something that allows us to compete with other city's dispensaries, and allows us to provide high paying jobs," Churchill said.

Last year, cannabis brought in nearly $5 million in general fund revenue to Cathedral City, paying for public safety and city services.

City officials said each 1% reduction in cannabis retail taxes cuts city revenue by about $150,000.

"Any time you have a reduction in taxes means you have to find the money somewhere else or you have to reduce services," city spokesman Chris Parman said.

Frustration mounted over the timing of the meeting – which fell on 4/20, the cannabis industry's most important day.

"We as small business owners are going to them telling them that we're struggling, and they chose the busiest day of the year, in between the busiest weekends of the year, to make us have to come in and basically beg them for help," Churchill said.

The study session was just for discussion; no action was taken by the council. Business owners hop to lower the city's cannabis tax by about 5 percent at a future meeting.