Cannabis operators urge Moreno Valley to justify annual public benefit and regulatory fees under recent court rulings

A lawyer representing cannabis licensees urged Moreno Valley to provide documentation showing that annual public benefit fees and regulatory permit fees charged to cannabis operators are tied to the city's costs, citing recent court decisions that limit such exactions.

Katie Podine, who said she serves as general counsel to several Moreno Valley cannabis licensees, told the council she has sought records, financial analyses and cost breakdowns since July 2023 to show the city's fees are not a hidden tax. "To date, no documents with sufficient evidence has been provided," Podine said. She said Moreno Valley charges operators more than $78,000 in annual fees in addition to an 8% gross-receipts tax.

Podine cited Sheets v. County of El Dorado, a U.S. Supreme Court ruling she said requires a rational connection and rough proportionality between imposed fees and the government burden they address. She also referenced a California case she identified as Seclaire Paint Co. v. State Board of Equalization and said the city's regulatory permit cannot be used as general revenue under state law.

Podine asked for transparency and records under the California Public Records Act, Proposition 26 and Proposition 218 and said that absent specific cost breakdowns, she must assume the fees function as a hidden tax. She said a detailed letter expanding on her position was entered into the public record as part of her comments.

Council and staff did not provide a substantive response on the record during public comment; Podine said she had discussed the matter with the finance department and the deputy city attorney prior to her remarks.