Desert Hot Springs temporarily reduces taxes on cannabis growers by 50%

Desert Hot Springs has become the latest city to give its cannabis industry a break by approving a temporary tax reduction on the cultivation rate charged to growers.

The city council voted 4-1 during its regular meeting on Tuesday evening, agreeing to slash taxes by 50% for the first half of this year.

Scott Rusczyk, who is a board member with the Coachella Valley Cannabis Alliance Network, applauded the decision, saying that high taxes have been strangling the cannabis industry.

"It is not, you know, a measure or a perspective of people being greedy people in the industry, the simple reality of it is they are struggling to stay alive," he said. "This is a wonderful step in the right direction."

The decision was made after city staff met with cannabis business owners who warned that they might have to cut staffing or even shut down due to the current tax rates.

The reduction will cost the city more than $1.1 million in lost revenue. The shortfall will be covered by the city's cannabis emergency reserve, which has grown to more than $5 million.

Mayor Scott Matas said Desert Hot Springs was a pioneer in the cannabis industry, and he wants the city to remain at the forefront.

"We all knew six years ago, when we put all this together, that there would eventually be a bubble, when is it going to burst? How is the industry going to work? And recently, we kind of felt that bubble bursting," he said. "We want to listen to our owners of our cultivation and our dispensaries and make sure that Desert Hot Springs continues to be business-friendly."

In the future, Desert Hot Springs city council could consider a retail tax cut similar to those recently implemented in Palm Desert and Cathedral City, in which the city tax was reduced from 10% to 5%.