Tax perks incentivize proper pot farm practices

Daniel Mintz
Mad River Union

​HUMBOLDT – Humboldt County’s management of cannabis farming will soon include a reward-oriented approach to encourage solar energy use, road upgrades and smaller-scale cultivation.

​Giving excise tax reductions to improve environmental protection was outlined at the November 19 Board of Supervisors meeting. Although the incentives, if widely pursued, could reduce Measure S cannabis excise tax revenue by millions of dollars, supervisors viewed it as a worthy investment.

​Deputy County Administrative Officer Sean Quincey said that as of mid-November, 1,275 cannabis growing sites were permitted, including those with interim permits.

Many were permitted under the conditions of the first version of the county’s commercial cannabis ordinance, which has fewer restrictions than the second version which is now in effect.

​The incentives will strive to bring the former in line with the latter’s improved environmental protections and, with more recent permittees, expand protections beyond the newer ordinance.

​Quincey outlined the benefits and the costs to the county. The second ordinance – known as ordinance 2.0 – prohibits use of generators on timber production parcels and requires cultivators who aren’t on the grid to get 80 percent of their power from renewable sources. ​

​A staff-recommended incentive is to allow a $1,000 tax reduction or 10 percent reduction of a total tax bill to bring previous permittees in line with 2.0 standards.

​If all eligible permit holders take it up, Measure S revenue would drop by $5.7 million.

​A second incentive category is for road improvements that reduce sedimentation. Those who bring their roads up to 2.0 standards or who go beyond them would get the same reductions as for renewable energy use, with a maximum $6.3 million total tax revenue reduction.

​Smaller-scale outdoor and mixed light grows of 5,000 square feet or less are also eligible for tax cuts of $1,000 or 15 percent of a total bill. The maximum county revenue reduction would be $325,000.  

​The maximum individual tax reduction for any incentive will be $5,000.

​Quincey said about half of all the county’s permits are for grows sized 10,000 square feet or larger and only about 300 permits are for grows of 5,000 square feet or less.

​“By keeping cultivation small, this incentivizes less water storage and less use of energy,” he said.

​But Supervisor Mike Wilson has doubts about the environmental value of small grows. He said two small farms – each with their own set of impacts – is “basically more fragmentation into the landscape than one 10,000 square-foot (grow).”

​He added, “We would be incentivizing sprawl, from that perspective.”

​Planning Director John Ford clarified that the incentive isn’t geared to “encouraging cultivators to get permits” but rather to improve the environmental performance of already-permitted grows.

​“Maybe the decision on sprawl has already been made,” he said.

​“I tend to be more of a rural guy and I actually like that people are living out in the hills,” said Supervisor Steve Madrone, who has long advocated for an incentive-based approach to regulating land use. “I see the future of forestry management as needing a large workforce of people living in the hills to help tend to things.”

​Some changes were suggested, with Wilson recommending one-year pilot programs for the solar energy and road upgrade incentives and Madrone asking for a size threshold reduction to 2,500 square feet.

​Supervisor Estelle Fennell said the 5,000 square feet threshold is more realistic, which was seconded during a public comment session.

​“Quite frankly, I think 2,500 is hard to sustain and make money at,” said cannabis farm operator Nathan Whittington, adding that the smaller-scale farmers make up “the marginalized community we need to address and find a path forward for.”

​Also during public comment, Terra Carver of the Humboldt Growers Alliance said that the county is “once again leading the way in considering best management practices” as “this hasn’t been done anywhere for cannabis.”

​Frequent commenter Kent Sawatsky questioned whether the county can afford the tax revenue losses but County Administrative Officer Amy Nilsen said about $21 million of Measure S revenue is expected in the 2021 fiscal year.

​Supervisors directed staff to return with an implementation plan for the incentives. The 5,000 square-foot standard was maintained and Wilson’s suggestion of pilot programs was taken up but the timespans were set at three years.

​The board also approved previously-directed tax collection changes, modifying billing cycles and effective dates. Supervisors also approved streamlining the process of reducing permitted grow area sizes.


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