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Two items were brought forth at this week’s Calaveras County Board of Supervisors meeting on Feb. 15 calling for a temporary tax reduction on cannabis cultivation and retail. This sparked immense debate among board members and public commenters, resulting in a vote to temporarily reduce cultivation tax by 60% and the tabling of the second item for a later date.
The two items were combined into a single submission. The prefatory statement for the items states, “This item proposes Board of Supervisors action as a response to a sharp decline in prevailing cannabis wholesale prices, and the resultant risk of business failure in the local cannabis industry. Without relief, the Division of Cannabis Control (DCC) anticipates a loss of approximately 20% to 25% of its current cannabis businesses. The DCC believes that tax relief could help reduce the loss of these businesses.”
The item printout also states that the DCC, “believes that the licensed cannabis market is currently experiencing a price collapse and that the average wholesale price for dried cannabis flower has fallen to approximately five hundred dollars ($500) a pound, and that the average wholesale price for dry leaves and trim has fallen to thirty dollars ($30) a pound. Taxation at the state level, together with administrative and regulatory costs on legal cannabis businesses, have exacerbated a market advantage enjoyed by illicit cannabis businesses which do not pay taxes, do not comply with labor laws, and do not comply with building and environmental standards.”
The proposed tax reduction would be for three calendar year quarters for 2022. The specific taxes being reduced would be, “gross receipts tax of 5% on cannabis businesses specified in Chapter 3.56.050(c)(2), and (2) the cultivation square footage tax on all cultivation types specified in Chapter 3.56.050(B). Proposed reduction is to 2% on the gross-receipts tax, and by 50% of the cultivation tax.”
There were many public comments both pro and against the items. Many of the pro item comments were from local growers arguing that this would help them stay afloat until the market improves. Many of the opposing public comments argued that the tax reductions would affect overall revenue for the tax fund. Other opposing public commenters felt that it is not fair for local cultivators/retailers to get a temporary tax reduction when other local businesses have not.
District 3 Supervisor Merita Callaway supported amending the bill to four quarters instead of three, with District 5 Supervisor Benjamin Stopper also supporting this position as well as keeping the gross receipts tax at 5%. It was ultimately decided that the item would need to be resubmitted with more data attached.
There was also debate over the 50% cultivation tax reduction, with attorney Zach Drivon proposing upping the 50% tax reduction to 85% to be more on par with other counties in the state. There was again debate among the board about this, with them ultimately landing on a 4-1 vote for a 60% cultivation tax reduction for four quarters of 2022.
The next Calaveras County Board of Supervisors meeting will be held on Feb. 22 at 8 a.m., with limited seating at 891 Mountain Ranch Road, San Andreas or online viewing via the county website. A special meeting will also be held on Feb. 23 at 1:30 p.m.
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