California hemp growers are burdened with high taxes, but Sonoma County growers will feel some relief at the local level by halving taxes on cultivation.
The Sonoma County Board of Supervisors announced March 17th press release They recently approved an amendment to the Cannabis Business Tax Ordinance to reduce tax rates on cannabis cultivation for the 2021-2022 fiscal year by 45% through June 30, 2023.
The reduced prices will be applied retroactively – starting July 1, 2021, with the aim of easing the financial hardships of local cannabis operators.
The expected loss of revenue from the tax cut will be offset by the excess of current and projected county tax revenue in excess of the program’s operating costs. Taxes collected in fiscal year 2020-2021 from 183 cannabis operators totaled $3,634,230 — compared to $2 million in estimated annual operating costs.
On April 5, county employees plan to introduce a revised law that reflects the temporary tax cut, as well as a decision to extend the January 31 and April 30 due date to May 31 for agricultural tax payments. The due date for all cannabis taxes was previously extended from January 31 to April 30.
Supervisor James Gore, chair of the Board of Supervisors, pushed for a new tax structure at a recent board meeting.
“This tax cut is in line with the market effects that cannabis producers are currently facing with a sharp drop in the wholesale price per pound,” Gore said. High Times. “The reason this was justified and justified and justified is because our cannabis tax, like many other jurisdictions, was based on coverage — square feet. It was supposed to be one and 5% of total receipts, but when you have a drop in price Sentence, and you’re still taxing on a square footage basis, suddenly the 3-5% probability increases to not just 15 or 20 – but over that.”
Gore mentioned some examples of people selling flowers at $300-400 a pound, but he also heard stories of people selling for much less.
“Our tax policy does not fit the scenario of what was happening. It was eventually voted 5-0 but there was a lot of disagreement in the discussion. There were those who didn’t want to roll back the tax,” he said. . So it will take some time until we come up with a solution on how to do this effectively. This means, as it should, that it fluctuates up and down with market conditions. This is the ultimate goal.”
“We’ve been getting people out of business with our policy, so it’s the right thing to do,” Gore said. “Reduced agricultural tax rates are needed to account for changes in the market and board policy direction. Surplus revenue in our cannabis program will support operating costs for two years as we transition to a new tax model and policy framework. We are committed to correcting this issue for Sonoma County, and that means continuing to Working between neighborhoods and industry advocates, learning from other counties, and finding local solutions that are fair and sustainable for both communities and the environment.”
The Democratic press Reports That there are 171 farmers under the jurisdiction of the county, who are taxed at different rates on a per square foot basis for outdoor, indoor and mixed crops.
Only 37% of cannabis growers in California said they were profitableaccording to a survey of 396 US growers conducted by the National Hemp Industry Association.
On January 1, the California Department of Taxes and Fees Increase taxes on dry weight flower In effect – ushering in the farmers’ latest blow. Prices rose about five percent to more than $161 per pound. It has pushed industry leaders to Parade at the Capitol trying to save the industry. Following the release of the state budget proposal for the 2022-2023 fiscal year, Governor Gavin Newsom I acknowledge that regulatory changes are needed to keep the cannabis industry legal in California while curbing the illegal market.
The changes occur after public reactions lament the state’s tax burden on the cannabis industry. The council is committed to supporting the state’s cannabis tax reform, as well as Senate Bill 1074Which would stop the state tax on hemp cultivation and increase the state tax on hemp cultivation. The Board based its support for both efforts on the state’s ability to maintain government tax revenue funding for children’s programs.
Tax relief was not the only item on the agenda. The Board of Supervisors also approved a resolution of intent to adopt the cannabis program framework based on 16 guidelines designed to inform the preparation of public plan amendments and an Environmental Impact Report required to update the Cannabis Land Use Ordinance and related regulations.
On June 8, the council directed staff to complete a comprehensive update of the cannabis program based on community feedback. To date, there have been eight public workshops, 12 small group awareness sessions and a district-wide survey to collect input.