Why it matters: The Palm Springs City Council has implemented a temporary moratorium on new cannabis licenses in order to address the glut of dispensaries in the area. With one dispensary for every 1,700 residents, Palm Springs has the highest concentration of weed shops in the Coachella Valley and one of the highest in the state.
What they are saying: City staff have recommended several policy options to control the growth of the industry, including capping the number of dispensary licenses at 15 and limiting owners to one dispensary. They have also suggested cutting the city’s cannabis taxes, which are among the highest in the Coachella Valley. The city’s cannabis tax revenues have declined for two consecutive fiscal years, and sales per dispensary have dropped.
The big picture: The oversaturation of pot dispensaries in Palm Springs has raised concerns about market oversaturation, high taxes, and the impact on the real estate market. Some city council members believe that the industry has grown too quickly and that the city should take steps to prevent its collapse.
What to watch: The city council will consider the recommendations put forth by city staff, including the possibility of limiting the number of dispensaries and reducing taxes. They will also analyze if the current number of dispensaries is necessary to serve the number of tourists visiting Palm Springs. The moratorium on new licenses is scheduled to end on December 10, but it could be extended to allow for more data and new recommendations.
My take: The temporary moratorium on new cannabis licenses in Palm Springs is a necessary step to address the saturation of dispensaries in the area. It allows city leaders to evaluate the current regulations and market conditions to develop a better framework for the future. The decline in cannabis tax revenues and sales per dispensary highlight the challenges faced by the industry, and it is crucial to find a balance that supports its sustainability while also addressing concerns about oversaturation and high taxes. Limiting the number of licenses and ensuring a diverse mix of businesses could help create a healthier and more competitive cannabis market in Palm Springs.