The Ceres Planning Commission received the first glimpse of a proposed overhaul of the city’s cannabis business regulations last week designed to strengthen the city’s enforcement authority and provide tools for taking decisive action against cannabis operators who violate city regulations or state law.

It also applies to cannabis dealers who fail to pay the city a “public benefit” fee.

The enforcement provisions of the proposed cannabis CUP framework are centered on the city’s ability to revoke a permit when necessary or enact fines.

Because of a serious echo due to audio technical issues relating to the city attorney’s presentation made via Zoom, the Planning Commission decided to put off consideration until the next meeting.

City Manager Doug Dunford said the city has found some cannabis related businesses in violation of local and state laws.

In other cases, businesses are behind in making payments to the city as required in their developer agreements. Dunford disclosed that Patient Care First on Angie Avenue is in arrears and Kase Manufacturing is struggling to make payments even though it sought and was granted two modifications to lower the fees to the city. Dunford said he is unsure why Kase hasn’t pursued renegotiations since they are struggling to pay the city.

Sales at licensed cannabis dealers are down due to the competition resulting from a proliferation of outlets. Also hurting legitimate cannabis shops is the black market – including some smoke shops illegally selling marijuana products – which sell product at cheaper prices.

The move to modify the ordinance related to cannabis business precedes an expected action to enact a sales tax on cannabis in Ceres lieu of developer agreement fees.

Under the provisions of the proposed Chapter 5.22, the city is authorized to inspect all cannabis business premises to verify compliance with the Municipal Code, applicable state laws, and any conditions of approval imposed through the cannabis Condition Use Permit (CUP) or development agreement. This inspection authority enhances the city’s ability to proactively monitor operations, ensure ongoing compliance, and take prompt corrective action when violations are identified.

Currently, the Ceres Municipal Code calls for any cannabis business wishing to operate in Ceres to sign a development agreement, essentially a contract with the city that spells out the obligations and duties and responsibilities, and pay a  “public benefit” fee to the city to offset their impact to the community. The fee is not classified as a tax because in order to impose a tax, it must be voter approved, noted City Attorney Nubia Goldstein.

In September the Ceres City Council signaled it is open to a flat tax on cannabis instead of developer agreement fees which have been steep to pay. Members appeared open to a four percent tax rate for retailers but smaller tax rates on manufacturing, distribution and testing. The city attorney is crafting an ordinance to be considered in the new year.

Most cities that allow cannabis dealers charge fees based on gross receipts. Others are charging indoor cultivators based on a square footage of canopy basis. Some cities apply a tax or a combination of both.