8 Questions We Need Answers To On The Cannabis Tax Break

We believe the following information, and answers to the following questions are essential before the Board of Supervisors takes action on any request to reduce taxes. We request that the answers to the following questions be provided to the Board and public well before any action will be taken on the request to defer/reduce taxes for cannabis operators.

1. COMPLETE PICTURE OF REVENUE AND EXPENSES

Include ALL sources of revenue, by category, and all costs (not just Staff time)

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A. Revenue. List consultant and legal fees and any amount taken from General Fund. What is the revenue stream from taxes? What is the revenue stream from fines? What is the revenue stream from fees paid during the application process?
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B. Expenses. Page 10 of the 1/4/22 Power Point presentation listed some expenses of the cannabis program. List other expenses involved in administering this industry, including unforeseen and unintended costs associated with cannabis such as litigation costs, public health costs/drug treatment, law enforcement, vehicular/traffic enforcement, safety & youth programs, property crime costs, environmental protection: costs to clean up abandoned grow sites and other environmental costs including ground, water and air pollution. The impacts of these items will be felt over many years to come , yet must be accounted for now to provide for
a complete accurate total cost picture. Also include expenses paid to outside consultants such as MIG.

2. MEASURE A

In March of 2017 over 70% of Sonoma County taxpayers voted to tax the cannabis industry for the benefit of multiple county programs. Measure A's goal? “...to fund essential county services such as addressing industry impacts, public safety, fire, health, housing, roads, and environmental protection..." Since the 3% tax program is not breaking even (Note: certain enforcement and required Program EIR costs are not included) the public is subsidizing this industry by covering the expenses involved administering cannabis, wouldn’t it be prudent to place a measure on the ballot so that the voters can weigh in? If a tax break is given for cannabis, wouldn’t this set precedence for the County to provide similar tax breaks to other industries during their difficult times?? Is this “delay” in the first quarter taxes similar to the delay allowed in tax payments after fire damage, which was then only provided in response to a natural disaster declaration?

3. INFLUX OF REVENUE FROM THE STATE

County is set to receive $1.1 million for assistance in permitting for cannabis and another $1,158,023 from 2021 Budget Act (AB-128) the “California Comeback Plan” to be used for operators holding provisional licenses to assist them in obtaining compliance with the California Environmental Quality Act for annual licensure. What's in California's new $262 billion operating budget? In addition, Sonoma County has asked the state for $5.5 million in equity grants. The County has surveyed 220 applicants and determined that 47 applicants with pending applications will be served and another 23 who have already received a license. Can any of this revenue be used to offset the expenses incurred to administer the cannabis program? Considering this financial support already being provided to the cannabis industry (~$2-7m), does it makes sense to provide additional support via a tax break?

4. TRACK AND TRACE

Is this program up and running and is it accurate and successful? If the County were to go to taxation by gross receipts does the head of the ACTTC see any downsides? Does ACTTC have confidence that gross receipts would not be abused? Since “Track and Trace” tracks the movement of goods, not their dollar value, how would this work for a taxation method based on gross receipts? If the growers were unable to sell their product would that mean they would pay no taxes on the plants they were unable to sell? Is
this statement true or false: Theoretically they might plant, commit violations and cause Code Enforcement and Ag resource expenditures but would pay no taxes to support these costs.

5. REVENUE FROM CANOPY

Is canopy measured every year? How time consuming is this for the Ag Commissioner? Is the cost of measuring the canopy recovered by the revenue received? Review of complaints shows many violations of growers exceeding the authorized square footage.

6. REVENUES ASSESSED FROM CODE ENFORCEMENT

How much in fines were assessed by Code Enforcement of Permit Sonoma ( i.e., Tyra Harrington – complaints for illegal operations)? How much in fines was assessed by the Ag Commissioner (i.e., Andrew Smith – complaints for current permittees and PRP)?

7. REVENUES COLLECTED FROM CODE ENFORCEMENT

How much was ACTUALLY collected by Permit Sonoma in fines? How much by the Ag Commissioner? For the Ag Commissioner: All fines collected by the Ag Commissioner are for violations committed by current permittees and PRP operators – are these operators the ones who also want a tax reduction or moratorium? Can you identify these offenders? For both Permit Sonoma and the Ag Commissioner: What is the comparison to other years? Declining? Increasing? Stable?

8. HOW ARE FINES SET AND ASSESSED?

Describe the process for setting fines for cannabis operators in violation of the law. Describe the process for assessing and collecting fines from cannabis operators in violation of the law. Who has the authority to set fine amounts? Who has the authority to assess and collect fines? When fines are assessed but not paid, what is the process to ensure collection of those fines, and is there a time limit
for fines to be paid? What is the penalty for cannabis operators who don’t pay their fines, and when is it imposed?

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