Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Cannabis Businesses topic
No spam. Unsubscribe anytime.
Lemoore staff report gaps in cannabis development agreements; city to audit and pursue unpaid fees
Summary
City staff told the council that development agreements with cannabis operators largely match the fee schedule but that the city failed to enforce fees and lacked billing/contact details. Staff said they will audit companies, require backup documentation going forward and work with legal to recover unpaid fees.
City staff told the Lemoore City Council on Tuesday that project-development agreements signed with cannabis companies match the city's fee schedule but the city did not consistently enforce those fees, and staff will audit companies and pursue unpaid amounts.
"What I found with each development agreement is they do match the fee structure that we have currently in place. What has been the biggest problem is the fees were not enforced with each of the companies," a staff member identified in the meeting as Ms. Valdez told the council. She said the city received significantly less than budgeted because finance was not provided billing or contact details when the agreements were executed and that several agreements base payments on gross receipts or on biomass percentages.
Valdez said the city will work with its sales tax representative, HDL, to obtain historical reporting and will devise forms that each cannabis company must submit with future payments so finance can verify amounts. She told the council that two dispensaries were reporting gross receipts monthly and paying as expected, two companies never opened operations, and other nonretail operations pay according to formulas tied to gross receipts or biomass, which are difficult to verify without supporting documentation.
City Attorney Christina D. Smith said legal staff will help pursue remedies for unpaid fees. When a member of the public asked whether the city would seek back fees, Smith replied, "Yes. We will be seeking legal action." Ms. Valdez also said staff are completing audits and that some backfill payments for cultivation fees can be made where records exist.
Council members pressed staff about enforceability and whether the city could renegotiate agreements. Valdez said the agreements vary in language and that some include renegotiation clauses every three years; she told the council the city's ability to unilaterally change executed agreements is limited and that staff will work with legal counsel to rectify underpayments.
No formal council vote was recorded on enforcement or recovery at the meeting; staff said they would proceed with audits and legal options and bring any required actions back to the council.
