Growers and cultivators in Humboldt County have regularly spoken up about Measure S, the county’s cannabis excise, and its effects on struggling cannabis farmers. Earlier this week, these industry professionals gathered virtually to call upon the Humboldt County Board of Supervisors to take immediate action to suspend the tax, according to a Times-Standard report.
The call for suspending Measure S first came to a head in January, as more than 200 cannabis industry representatives and concerned citizens held a rally at the Humboldt County courthouse, with farmers elevating concerns around falling prices and saturated markets that are limiting their ability to sell at all, on top of the excise tax.
Natalynne DeLapp, Executive Director of the Humboldt County Growers Alliance, spoke to the crowd, “This is your community and they are vital to our collective success…We are standing here today not asking for a handout, but a reprieve from Humboldt County’s flat rate cultivation tax–a tax that does not adjust with market conditions.”
Measure S was first approved by Humboldt County voters in November 2016, imposing a cannabis cultivation tax of $1 to $3 per square foot to maintain and improve county services, and was passed ahead of statewide legalization. In theory, without application, many believed it was a fair and simple tax rate should cannabis become a booming business venture within the county.
In addition, cultivators are subject to two primary taxes at the state level: the cultivation tax and the excise tax. The cultivation tax for flower per dry-weight pound has also increased from $154.40 per pound to $161.28 at the start of the year.
The taxes fall on top of the price of cannabis, which experts say has dropped by approximately 70 percent in the last year, with many sun-grown farmers selling their flower for only $300 a pound.
Before Tuesday’s discussion, 2nd District Supervisor Michelle Bushnell recused herself, citing a conflict of interest because of her own cannabis farm, though she emphasized her support for her constituents. Her decision to recuse drew criticism from the public throughout the meeting.
Natalynne DeLapp, executive director for the Humboldt County Growers Alliance, was one community member who challenged Bushnell’s decision, referencing that 80 percent of farmers didn’t have representation during the hearing, arguing that no decision should be made that same day.
Assistance County Administrative Officer Tabitha Miller delivered a presentation to the board, providing recommendations that would address the cannabis community’s concerns. Miller said the discussion as a whole is addressing two items surrounding unsustainably low market pricing “that is just fiscally and financially challenging our cannabis tourism industry,” along with the challenge of selling cannabis in a legal market.
“What we’re asking the board to do today during this agenda item is to provide the County Administrative Office with direction to develop a cannabis excise tax expenses waiver program,” Miller added.
County staff recommended a number of moves for the future, like waiving the excise tax for small farmers (10,000 square feet or less), forgiving the second installment of the excise tax for 2020, leaving Measure S as is and pursuing additional funding from the state or Project Trellis.
More than 60 community members spoke during the block for public comment, nearly all cannabis industry representatives who favored the suspension of Measure S.
“As we have repeatedly stated, farmers are unable to make the balloon payments associated with the October and March tax bills,” DeLapp said. “These bills need to be forgiven and waived lest the county deliver a death blow to an untold number of our cannabis operators. … We are asking you to forgive, waive, suspend, and then amend a new fair and equitable tax measure that works for both the farmers and the community. We need to save our Humboldt farms.”
Ross Gordon, policy director for the Humboldt County Grower’s Alliance, said there is “no other form of agriculture” subject to the level of taxation cannabis is. He, too, referenced the price drop and lack of relief coming back to the industry.
“If you manage to pull a profit then suddenly that means you don’t qualify for relief anymore. Not true for any other business,” Gordon said. “This idea that if it’s cannabis, it’s just skimmed off the top, if there’s anything left there anymore. …The tax is no longer stable. Folks cannot pay. I really hope you’re hearing the comments from people today.”
Over two-and-a-half hours, cultivators brought up similar concerns and urged leaders to suspend Measure S. After public comment, supervisors deliberated for another hour-and-a-half on next steps.
“We can surmise that within the last two years, (the price of cannabis has) gone from somewhere around $1,200 a pound to about $400 a pound…approximately a two-thirds reduction in price,” said 3rd District Supervisor Mike Wilson. “…I think we can come back with something that definitely lessens the burden. I think we should do that. …I also have some questions about if we can adapt in the short run.”
As they approached the fourth hour of discussion, the board voted 4-0, with Bushnell recusing herself from the vote, to continue discussing the topic on Monday.
