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The Humboldt County Planning Department will soon be suspending the permits of hundreds of cannabis farmers who failed to enter into a payment agreement for owed Measure S taxes by the March 31 deadline, Planning Director John Ford told the Journal.

The Humboldt County Board of Supervisors voted in October to give cannabis farmers until March 31 to enter into payment plans for a total of $14.1 million in unpaid excise taxes, and until March 31, 2025 to pay their bills in full. Ford said his department is awaiting a list from the Humboldt County Treasurer-Tax Collector’s Office of farmers who have owed taxes but failed to enter into a payment plan.

According to Whitney Morgan, the county’s revenue and tax manager, 318 cannabis farmers have agreed to payment plans with the county that, if paid in full, would make good on a combined $4.2 million in taxes owed. But Morgan says farmers associated with another 401 accounts with balances due totaling $6.1 million failed to reach payment plans with the county by the deadline.

The numbers Morgan provided total $10.3 million — $3.8 million less than the amount staff said was owed in Measure S taxes back in October. Morgan says $2.8 million of that was deemed “uncollectable” by planning staff due to permits being “approved or withdrawn before cultivation,” while it was also discovered some accounts had been over billed due to misclassifications. Some accounts were also simply paid in full, she said.

Those who failed to enter a payment plan will have their permits suspended for 90 days, Ford said. Farmers can then use those 90 days to enter into a payment plan and pay “what should have been paid within the first 90 days,” in which case the suspension will be lifted, Ford said. Those who fail to enter a payment plan and come current on it within 90 days will see their permits scheduled for revocation, he said.

Ford said he expected the notices of suspension to be mailed out by the end of this week.

Passed by voters in 2016, Measure S imposes taxes on farms of up to between $1 and $3 per square foot of cultivation space, depending on whether its outdoor, mixed light or indoor. Supervisors voted to suspend the tax entirely for two years in 2022 but opted to reimpose it at a 90-percent reduced rate beginning for the 2024 cultivation year, with payments due in Spring of 2025. At the same time, they voted to begin cracking down on farms with unpaid tax bills.

It's uncertain of how much of the $10.3 million owed the county will be able to collect, as some have estimated the bulk of the $6.1 million owed by those who have not reached payment plans is for farms that have gone out of business, with their owners having left town and the properties involved having changed hands.

The bills coming due is also a point of anxiety for the local cannabis industry, which is already struggling amid statewide oversupply, low wholesale prices and what farmers deem excessive regulatory and compliance costs. The Humboldt County Grower’s Alliance (HCGA) has warned that the county’s effort to collect on owed Measure S taxes, coupled with the state no longer granting provision licenses beginning next year, could result in a “deck clearing” in 2024, with many farms going out of business.

“I’m hearing from a number of farmers who don’t have the money, who just still don’t have the money,” HCGA Executive Director Natalynne DeLapp said.

Editor's note: This story was updated from a previous version to correct the date by which owed Measure S taxes need to be paid in full. The Journal regrets the error.