The Santa Barbara County Board of Supervisors on Tuesday supported increasing the cannabis business licensing fees, which have not been adjusted since 2018.
The fees are collected for initial applications, annual renewals, and compliance activities, said financial analyst Steven Yee of the County Executive Office.
“Fees were initially established as deposit fees, meaning that applicants are charged based on actual hours conducted by the licensing team using the established reimbursement rates for each job classification,” Yee explained.
The county is not achieving full cost recovery due to outdated salary, benefits, and indirect cost rates, according to the staff report.
“This will alleviate the significant administrative burden placed on the Cannabis Program Administration staff that must account for the high volume of applicant fees and recognize revenue to the licensing team departments at least quarterly,” the staff report said. “The establishment of a fixed fee amount will provide applicants with certainty of the total fees charged in connection with renewals and compliance.”
The fees will vary based on the type of license, area of operation, and whether an energy conservation plan applies, Yee said.
The current deposit fee for all initial application license types is $3,250, but the new deposit fee would range from $3,380 to $5,758.
The annual compliance management processes deposit fee is currently $2,500, but the new fixed fee would range from $2,593 to $4,276, and the annual renewal deposit fee is currently $3,600 but the new fixed fee would range from $2,803 to $4,989, according to Yee.
“The fixed fee model is currently used in other processes throughout the county and transitioning to this fixed fee model will provide applicants certainty of the total fees charged for annual renewal application review and compliance efforts,” he said.
While ultimately passed and advanced for a final hearing and vote on Jan. 25, Fifth District Supervisor Steve Lavagnino questioned why the fees would be collected prior to the applicant being in business and actually generating income.
“Everything that I’m hearing, and I think everybody is reading, is that the industry is in a state of freefall right now, everybody’s struggling. I don’t want to see additional burden put on somebody before they actually even get to the point when they are in business,” he said.
“The industry is paying for this one way or the other, and so I think I would prefer to see it paid out of the taxes. At that point, somebody actually has the ability to start a business and help us pay for the tax oversight.”
Cannabis tax revenues have come in lower than expected for Santa Barbara County recently.
— Noozhawk staff writer Jade Martinez-Pogue can be reached at jmartinez-pogue@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
