Mad River Union
HUMBOLDT – Continuing to respond to the evolving needs of the cannabis industry, Humboldt County supervisors are changing the timing and conditions of cannabis excise tax payments.
At its March 26 meeting, the Board of Supervisors voted to adjust the timing of the tax payments to coincide with harvesting and match the effective date of taxes with when plants are actually in growing areas.
Supervisors also gave the Planning Department a go-ahead on adjusting grow areas based on how much is actually being used. The county’s excise tax rates are based on square footage of grow areas and farmers have pointed out that conditions can change and they may not use all of the area listed in their permits.
Finally, supervisors asked staff to bring back proposals for incentivizing the use of rain catchment and renewable energy systems.
There was also some discussion on taking crop loss into account and supervisors agreed to explore that in the future.
The decisions are aligned with what Terra Carver of the Humboldt Growers Alliance described as the desires of the alliance’s members.
Also during public comment, Paul Hagen, an environmental compliance consultant, suggested tax relief is especially needed in Humboldt.
“We have this problem across the state, but more acutely in this county than any others, of death by a thousand cuts because of the big burden of environmental hurdles that have to be overcome by our cannabis farmers,” he said. “We have costs that don’t exist in most other counties in the state.”
A man who said he’s an Arcata resident who farms in Willow Creek described the financial challenges he’s dealing with. He said he got his cultivation permit in 2017 and paid $40,000 in excise tax.
After being billed for another $40,000 in 2018, he paid half. He said he’s expecting another $40,000 bill for 2019 and owes the state a $14,000 licensing fee.
“I can barely pay my house payments each month,” he continued. “I will possibly be out of business soon and none of you will be getting any of my money – you guys are killing us with taxes and you will be collecting no taxes as we will soon be extinct.”
Blue Lake resident Kent Sawatzky wrote the ballot argument against Measure S, which established the county’s cannabis excise tax. He said the county has collected far more money off the tax than it estimated in the ballot measure’s language and a moratorium on collecting it would be justified.
“At $17.8 million, you’ve collected enough for two-and-a-half years of what you said you needed,” he continued. “So there is no reason not to shut this down.”
The county levies taxes of $1 per square foot of outdoor grow area, $2 for mixed light and $3 for indoor. There was some discussion on lowering the rates, with Supervisor Steven Madrone saying doing so will increase compliance.
But other supervisors didn’t support that, as rates of up to $12 per square foot were originally considered.
The payment dates of the tax will change from the current dates of May and November, which correspond to property tax bills, to mid-March and mid-October.
The vote to approve the changes wasn’t unanimous. Although Supervisor Mike Wilson agreed with most of them, he didn’t support pursuing the incentives because they’re already included in the county’s upcoming cannabis industry assistance programs.