The Santa Barbara County Board of Supervisors on Tuesday continued to work toward decisions on taxing marijuana operations and where the new revenue would be spent, and a final decision could be made at the Feb. 6 meeting.
Staff is recommending a cannabis taxation program that includes 6 percent of gross receipts on a retailer, 4 percent of gross receipts on cultivator and manufacturer license types, 1 percent gross receipts on nursery and distributor (non-transporter) license types and a vertical integration cap of 8 percent.
Local cannabis business owners have urged the supervisors to adopt an equitable tax rate, which they believe should range from 1 to 2 percent of gross revenues and not be combined with taxes charged by cities, such as Santa Barbara, in the county.
They say anything higher would hurt their chances for success and lower rates are necessary to create a robust local industry that can compete with other counties and cities where fees and taxes aren’t as high, such as Lompoc, which isn’t presently taxing marijuana operations.
“We are trying to standardize. We are trying to regulate,” said Liz Rogan, Cannabis Business Council of Santa Barbara County board member. “These taxes really affect the working class in the end.”
The Board of Supervisors have not yet approved a marijuana licensing program, and will not discuss the issue again until March 20.
The county Tax Collector’s Office staff requested a delay on Tuesday, but Chief Investment Officer Jennifer Christensen told the board a delay wouldn’t affect the upcoming deadline of placing a tax measure on the summer ballot or drafting a tax ordinance.
“The right way to implement this program is to include licensing,” Christensen said. “We want to give you a program that really works and works in the right way for your policy decisions … something that we can administrate.”
The Tax Collector’s Office is recommending the supervisors authorize segregated banking for all revenue — permit and license fees and taxes — collected from cannabis operations, which staff believes would “at least mitigate some of the risk for the county.”
No banks have agreed to handle revenue derived from marijuana sales and operations, and Attorney General Jeff Sessions recently revoked the “Cole Memo,” which basically said the federal government would take a hands-off approach to enforcement in state’s that legalized marijuana.
California voters passed Proposition 64 in November 2016 legalizing recreational marijuana use. On Jan. 2 this year, the state began issuing temporary licenses to individuals allowing them to open retail pot shops, where people can purchase cannabis on site.
Santa Barbara County banned recreational marijuana operations, including dispensaries and cultivation, while the supervisors work to develop a regulatory ordinance. Many cities are also developing ordinances right now.
North County Supervisor Steve Lavagnino expressed frustration the process, which began more than a year ago, is taking so long, and said if people believed implementing delay tactics was going to stop marijuana use in their communities, they were wrong. He urged the board to adopt a tax structure sooner than later.
“If this fails and we don’t get it on the June ballot, … it’s going to be business as usual,” Lavagnino said. “If you think it’s hard to enforce now, it’s going to be 10 times worse. It’s not going away; It’s a pipe dream.”
County staff has spent more than a year working to develop a permanent ordinance regulating cannabis operations in the county, including licensing.
First District Supervisor Das Williams also expressed his frustrations with the lengthy process, which he said continued to cause problems for Carpinteria, where residents are exposed to what they claim are round-the-clock noxious odors from multiple marijuana grows there.
“Remember that any delay means a delay in the odor control and the lighting requirements that would be in the ordinance,” Williams said. “That is a big deal.”
At the Feb. 6 meeting, supervisors are scheduled to decide whether any potential tax on marijuana operations would be a special tax, where they must specify to voters how the money would spent before the issue is decided at the ballot box, or a general tax, where the board can spend the revenue on what it chooses.
The board must also decide whether to put the tax measure on the June or November ballot, and whether the tax would be countywide.
County staff members recommend the board adopts a general tax for the June ballot.
— Noozhawk contributing writer April Charlton can be reached at firstname.lastname@example.org. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkSociety, @NoozhawkNews and @NoozhawkBiz. Become a fan of Noozhawk on Facebook.