Let us have a viable Humboldt County economy.
The average 2,300 square foot cannabis garden, suggested by the California Department of Fish and Wildlife, is only viable now because prices have not yet bottomed out and no one is paying half their income in administrative and tax expenses. The following facts, figures and estimates faced by the Humboldt family paint a very grim picture. We are going to be regulated and taxed into extinction!
The Northcoast Environmental Center has suggested that rules dictate total garden canopy sizes be no more than 2,000 square feet and only 99 plants. The Humboldt Mendocino Marijuana Advocacy Project has suggested that total garden canopy size be no more than 2,500 square feet. We will use the average existing garden size of 2,300 square feet that Fish and Wildlife overflights have suggested for our calculations.
Based on interviews with local growers, the maximum potential yield is about one-tenth of a pound of processed cannabis per square foot. If the garden is 2,300 square feet, then this represents 230 pounds per year. The future, average sales price will most likely drop to $1,000 per pound. This figure is based on the declining black market price point — nearly a $200 to $300 price drop over the last few years.
So far, the cannabis farmer's total gross annual income is $230,000 a year. Let us now subtract the potential costs of making this gross income.
— The income tax bracket for a three-person farming family is 25 percent to 28 percent (33 percent if single) or $57,500 plus. After taxes, the farmer will have $172,500 left. This rate is based on IRS tax rates that can be verified online. Most federal deductions are not allowed since cannabis is taxed on gross sales.
— The median property tax for Humboldt County is $1,651 for a home and curtilage (taken from www.propertytax101.org). This leaves the farmer with $170,849.
— Interviews with local growers indicate that the average cost of producing one pound of market-ready cannabis is $500. If we multiply by 230 pounds, this represents another $115,000 that farmer must pay, leaving them with $55,000.
— The Census Bureau suggests that average business expenses are about $10,000 for this income bracket. This leaves our farming family with $45,000. At this point, the income is just above the average cost of living for a three-person family in Humboldt County after taxes.
— The county business license is $335.45 each year according to humboldtgov.org. (California Cannabis Voice Humboldt has proposed a $25 business license fee in its draft marijuana land use proposal.)
— The California Department of Food and Agriculture will likely assess $150 each year for a California Nursery License — which all Humboldt nurseries pay.
— The State Board of Equalization charges a $25 per year registration fee to register your business and obtain a sales license.
— CCVH has suggested a proposed excise tax of 50 cents per square foot or $1,150 on a cannabis farm of 2,300 square feet (excise tax is 15 percent of sales in Colorado).
— Potential county permitting fees could be as high as what Colorado is levying: a whopping $10,000 to $15,000 per year. We will use a more modest, and unsubstantiated, $2,300 each year (this is $1 assessed per square foot).
These five items add up to $3,960.45, leaving the farmer with a $41,039.55 yearly income. This is a best case scenario. These fees could be 10 times more expensive!
The Census Bureau has posted the average cost of living for a family of three in Humboldt County varying between $40,000 to $45,000.
Now we will add in expected compliance costs, including the average cost to meet code (including employees, quarters, kitchens, bathrooms, work environment, insurance and other infrastructure) at an estimated $10 per square foot or $23,000 (or much more); the average well drilling and installation cost of about $10,000 (or, again, much more); and the average cost to install a pond of about $10,000, based on local prices (or much more). These developmental costs represent a minimum of $43,000 in potential costs. We strongly suspect these costs will be much higher, but at $43,000, the costs represents nearly the entire yearly income of our farmer.
This means that they are left with nothing!
No money to buy a home.
No money for college.
No money for health issues.
These expenses will wipe out the majority of small growers.
These "caps" to save the small grower are going to destroy them.
In desperation, these people will retreat to the black market and necessary regulation will fail.
If your garden is 2,300 square feet now, after legalization that footprint will have to double to maintain your current income. We want more than a subsistence life for our children. No one knows enough about where this business is going to be putting limits on it. We need to stay agile. Forbes magazine has recently suggested that we should be prepared to pay 50 percent of our current income to the federal government.
Steve Dodge lives in Garberville and is a member of the Humboldt Growers Collective. You can read more at www.humboldtgrower.wordpress.com.
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