Monday, February 7, 2022

Supes Move Forward with Cannabis Tax Relief

Posted By on Mon, Feb 7, 2022 at 2:35 PM

click to enlarge Local cannabis farmers say plummeting wholesale prices have left many on the brink of insolvency, prompting them to push for tax relief. - SUBMITTED
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  • Local cannabis farmers say plummeting wholesale prices have left many on the brink of insolvency, prompting them to push for tax relief.
The Humboldt County Board of Supervisors is moving forward with providing local cannabis farmers some tax relief after a flooding of the wholesale market sent prices plummeting in recent months.

The board voted 3-1, with Second District Supervisor Michelle Bushnell having recused herself due to a potential financial conflict of interest and Fifth District Supervisor Steve Madrone dissenting, to give farmers until September to make payments on bills due this year, while reducing next year's tax bills by 85 percent. Citing concerns over the tax breaks' impact on the county budget — which County Administrative Officer Elishia Hayes warned could result in a hiring freeze — Madrone had supported a more modest 50-percent reducing in the coming year's taxes.

The board had previously offered farmers a reprieve by forgiving late payments on bills due in October of last year until May of this year. Today's vote — which will have to come back before the board for final approval at a future meeting — would give farmers until September to make those payments, as well as their second-installment payments, which were slated to come due in March.

The tax relief — which cannabis farmers maintained was crucial in trying to keep local farms solvent amid a crashing wholesale market — will result in the county losing millions in budgeted revenue in an effort to help local growers stay afloat until market forces stabilize.

Acting without Bushnell, who recused herself when the board first took up the issue last week, saying she had a licensed cannabis farm and had been advised to recuse herself from discussion on the issue, the board was unanimous in its desire to offer some relief to the struggling industry. The point of contention was what type of relief was appropriate given the industry's challenges and the county's fiscal situation. Humboldt County faces a projected deficit just a couple of years down the line and only recently approved substantial raises for most employees in an effort to address a staffing crisis across multiple departments.

First District Supervisor Bohn initially suggested a complete suspension of the cultivation tax, which was passed by 66 percent of county voters in 2016 and imposes a $1, $2 or $3 per-square foot cultivation tax on outdoor, mixed light and indoor cannabis cultivation, respectively. Third District Supervisor Mike Wilson, however, expressed concern that zeroing out the tax would make it difficult to re-impose down the line and Bohn suggested a temporary 90-percent reduction on the 2021 tax, which will be billed in two installments — one in October and the second in March of 2023.

Madrone countered with a suggested reduction of 50 percent, expressing concerns about how foregoing millions of dollars in revenue would impact county services. Bohn then said he'd be willing to decrease the reduction to 85 percent, but it wasn't enough to win Madrone's support.

The issue will come back before the board for final approval in the form of a resolution at a future meeting, at which time Hayes said she would also present options for corresponding reductions in expenses, saying they will likely include a hiring freeze and a suspension of one-time expenditures.

Pick up this week's Journal for a more in-depth look at today's discussion and find prior reporting on the issue here.

Editor's note: A prior version of this story misspelled County Administrative Officer Elishia Hayes' name. The Journal regrets the error.
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Thadeus Greenson

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Thadeus Greenson is the news editor of the North Coast Journal.

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