Cannabis Compliance

On April 15, 2025, The City Council approved an ordinance reducing the cannabis retail tax rate from 10% to 5% of all sales. This ordinance will go into effect on June 6, 2025. For monthly tax calculations beginning with June 2025, the cannabis retail tax rate of 5% will be used. The City’s third party collection agency has been notified and directed to reduce the tax rate to 5% effective June 2025, affecting the payments due in July 2025.

On March 5, 2024, the City Council approved an ordinance requiring annual cannabis regulatory permit renewals. This ordinance went into effect on April 18, 2024. All cannabis facility operators were required to submit a regulatory permit application and fee no earlier than sixty (60) calendar days but no later than 30 days before the expiration of the permit. Failure to renew a regulatory permit shall result in the permit being terminated. If a regulatory permit is terminated, the operator must cease all operations as a cannabis facility.

Cannabis retail facilities were exempt from the one-year regulatory permit term and the annual renewal permit requirements. On May 6, 2025, the City Council approved an ordinance to repeal the cannabis retail facility exemption from the one-year regulatory permit term and the annual renewal permit requirements. This ordinance will go into effect on June 18, 2025.  Any current owner of a cannabis retail facility on the effective date shall be required to renew their regulatory permit within six months (December 18, 2025) from the effective date of the ordinance, or earlier. Although an annual renewal fee for cannabis retail facilities was approved, the City Council voted to waive that fee for future consideration. While the annual renewal is required of all cannabis facilities, the annual renewal fees for cannabis retail facilities is currently being waived.

Regulatory permits issued within the six months prior to the effective date of the ordinance shall be required to renew their regulatory permit within one year from the effective date of the ordinance.

Cannabis Regulation Updates 2024

On March 5, 2024, the City Council approved an ordinance requiring annual cannabis regulatory permit renewals. This ordinance will go into effect on April 18, 2024. All cannabis facility operators are required to submit a regulatory permit application and fee no earlier than sixty (60) calendar days but no later than 30 days before the expiration of the permit. Failure to renew a regulatory permit shall result in the permit being terminated. If a regulatory permit is terminated, the operator must cease all operations as a cannabis facility. Cannabis retail facilities are exempt from the one-year regulatory permit term and the annual renewal permit requirements. For more information on these amended requirements please see Staff Report.

1. Any current owner of a cannabis facility on the effective date shall be required to renew their regulatory permit within six months (October 18, 2024) from the effective date of the ordinance, or earlier.
2. Regulatory permits issued within the six months prior to the effective date of the ordinance shall be required to renew their regulatory permit within one year from the effective date of the ordinance.

Cannabis Tax Remittance

On April 2, 2024, the City Council approved an ordinance amending Title 3 (Revenue and Finance) of the Desert Hot Springs Municipal Code to implement the following:

1. Cultivation Facilities:
   • Will no longer make two large biennial payments, and instead make 12 monthly payments.
   • Codify a "ramp-up" period for new cultivation facilities that generally do not receive income until their first crop has reached full maturity and processing, which takes several months.
   • The ability to apply for a "Lost Cultivation Crop Waiver" after the loss of a crop, subject to eligibility and application approval.
2. Cannabis Facilities:
   • All facilities will be mandated to make monthly tax payments through a Fee Collection System.
   • Codify that Cannabis Tax Payment Arrangements be approved at the discretion of the City Manager and be subject to penalties and interest.

The ordinance will go into effect on May 16, 2024.

The City will reach out to each cannabis facility to request the required information to make tax payments through our fee collection system. Our fee collection system is projected to go live in July of 2024.

For more information on these amended regulations and requirements please see Staff Report.

Cannabis Ordinance Updates

1. On February 20, 2024, the City Council adopted an ordinance to lower cannabis cultivation taxes. The ordinance reduces the cannabis cultivation tax from $10.20 per square foot to $5.75 per square foot of space utilized in connection with the cultivation of recreational and medical marijuana. The ordinance will go into effect on April 4, 2024. However, the new tax rate will be applied to the January - June 2024 tax period. The new rate will be automatically applied to all cultivation taxes for the January - June 2024 and subsequent tax periods. For more information on the ordinance please see here: Staff Report - SR-24-037 - Pdf
2. On March 5, 2024, the City Council adopted an ordinance requiring regulatory permit renewals. The ordinance is retroactive and will apply to all current cannabis facility operators. Any current owner of a cannabis facility on the effective date (April 18, 2024) of the ordinance will be required to renew their regulatory permit within six months from the effective date (April 18, 2024) of the ordinance, or earlier. Regulatory permits issued within the six months prior to the effective date (April 18, 2024) of the ordinance will be required to renew their regulatory permit within one year from the effective date of the ordinance (April 18, 2024). Failure to renew a regulatory permit may result in the regulatory permit being terminated. If a regulatory permit is terminated, the operator must cease all operations as a cannabis facility. For more information on the ordinance please see here: Staff Report - SR-24-050 - Pdf