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Local News

Tax relief and logjams for cultivators

A woman in a striped shirt looks to her left.
Sarah McBurney, the senior cannabis program manager with the county’s cannabis department

Though a reduction in the cannabis tax is on the table for the next two years, there are still complicated obstacles for those who remain in the cannabis industry.

Only 23 growers in the county have achieved the goal of obtaining the coveted combination of county license plus annual state license. Another 481 have provisional licenses. They have until the end of the year to upgrade to the state annual.

Sarah McBurney, the senior cannabis program manager with the county’s cannabis department, told the Board of Supervisors General Government committee this week that growers who are required to complete a biological survey appear to be out of luck. For example, if growers need a biological survey that includes a spring flora review, and the cannabis department is reviewing their application in July, “that window has already passed,” she noted. “We cannot compete that bio(logical) survey until next spring, which puts us past” the end-of-year deadline. She said the department has tried to get around the conundrum in a variety of ways, “but we were unsuccessful.”

Local cultivator and longtime cannabis advocate Corinne Powell asked McBurney what’s in store for people who miss the deadline. “If we know that we have X applicants in the queue and we know that they cannot legally cultivate; if they are not holding a provisional license at this time and the state stops issuing them and they have not been approved for a professional license at the state level,” she posited; “What happens with our process at the county level?”

The county permit is called a CCBL, or Cannabis Cultivation Business License. The state is conducting an environmental impact review, or EIR, to license commercial cannabis cultivation in the county. The public comment period just closed, which could be construed as another logjam.

McBurney told her that, “Anyone that applies for a new CCBL application, or a Phase III application, would have to apply for an annual license at the state level. Once you apply at the county, there is no timeline that is needed for you to apply at the state….And I would encourage applicants to start that annual application sooner rather than later. But it is true that you cannot cultivate without that annual license at the DCC (California Department of Cannabis Control).” Because the comment period on the draft EIR just closed, there is not a clear pathway to state licensure. McBurney believes this will clear up once the EIR is complete, though it is possible for applicants to hold a county license, be paying taxes and fees, “but not be able to legally cultivate commercial cannabis.” She added that another logjam is that another 55 of the pending applications for the month of May are stuck waiting on a review and referral process by CDFW.

Supervisor John Haschak asked Deputy County Counsel Jared Schwass to explain a density procedure, which allows growers to apply for permits to grow up to 22,000 square feet, more than double the 10,000 that was widely understood to be the maximum when 10a17, the cultivation ordinance was adopted in 2017. Schwass said 10a17, the cultivation ordinance, clearly states that two licenses are allowable, due to contemplations by the mitigated negative declaration or MND, the environmental document that was prepared for the ordinance.

“The MND contemplates that individuals will have up to 22,000 square feet of cultivation on their parcel, if they have a nursery,” he said. “There is no distinction of environmental impacts between a nursery and mature cannabis canopy. The environmental impacts are similar and/or the same.” He insisted that, “There is no expansion as people like to say.”

Supervisor Glenn McGourty is thinking about how best to render cannabis data for the next crop report. The most recent crop report is from 2021, but Angela Godwin, the new ag commissioner, arrived this week and has pledged to throw herself into bringing the reports up to date.

McGourty and Haschack agreed to ask the full board to provide some tax relief to those who remain in the legal cannabis industry. Haschak noted that the current two-year-old 50% reduction in cannabis tax is set to expire this year. He suggested lowering the reduction to 40% next year, and 35% the following year.

Deputy CEO Tony Rakes said the Executive Office is projecting about one million dollars in cannabis tax for the next fiscal year, assuming the 50% reduction, though the projection for the current fiscal year is already exceeding the original projection. McBurney said the projected net county cost of the cannabis department for next fiscal year is $550,000. The full board will have the final say on the tax proposal.

Local News
Sarah Reith came to Mendocino County in 2008 and worked as a reporter and freelancer, joining KZYX as a community news reporter in 2017. She became the KZYX News Director in March, 2023.