Humboldt tax break will erase $13M from county budget

In February - as reported in the Lost Coast Outpost -- Humboldt approved an 85% reduction in 2022 Cannabis Taxes as well as a further postponement of 2021 Q4 tax payment, after significant lobbying by the local cannabis industry.

Historically, Humboldt’s tax revenue from its 1,700 cannabis operators was about $20 million/year; in 2022, expected revenue was originally estimated at between $14-12 million, given the ~30% delinquency rate and this will now drop to $2M-3M. Humboldt’s Supervisors acknowledged that taxes are NOT the cause of the industry’s financial problems, citing the main factor in the local market collapse being out-of-county competitors who grow more efficiently and can deliver a less costly product to market.

Adding insult to injury, to compensate for lost revenue Humboldt officials recommend a county-wide hiring freeze and the option to reduce staff, including cannabis enforcement. This means that residents, whose property values are most impacted by environmentally harmful cannabis operations, may be paying higher taxes to cover the expenses of County essential services and bearing the brunt of weaker enforcement. Is it right for other taxpayers to be required to make up the shortfall in revenue from this 85% tax cut with property taxes?

Nicole Elliott, director of the California Department of Cannabis Control, clearly stated in the January 31st, article in CalMatters, “It is an oversimplification to say that tax reduction will solve all of the industry’s problems. It’s just a vast oversimplification of the number of variables that impact the health of the legal market and that support or foster illegal activity. It is not tax alone.”

Yet, on March 15th, Sonoma County’s Board of Supervisors (BOS) will consider similar actions for the County’s cannabis cultivators and manufacturers. Note that Sonoma has about 200 growers, and Sonoma’s tax estimates range from $3-5 million/year (though in the Jan 4th Board of Supervisors discussion staff estimated $2.5M in revenues vs $2.4M in known costs).

Like Humboldt, Sonoma cannabis operators primarily grow outdoors, with many located in fragile watersheds. Given many dispensaries are deprioritizing buds from outdoor grows, community advocates question why Sonoma County is considering providing incentives to these ill-fated cannabis operations.  

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