Legal Update - Taxation Without Representation
It’s tax time folks…and as many of you are experiencing, it is a doozy. Currently, the County of Monterey cannabis tax is $15 per square foot for cultivation canopy, $2 a square foot for nursery operations and 5% gross receipts for distributors, retailers, and manufacturers. The tax in Monterey County is one of the highest cannabis taxes in the state and it is driving operators out of business and forcing capital investors to take their business elsewhere in the state. Something has to be done.
The Monterey County Board of Supervisors Ad Hoc Cannabis Standing Committee had a special meeting last week wherein HDL Consulting released their newest report suggesting the cultivation tax be lowered to somewhere between $4 and $7 due to the various market demands, the passage of Proposition 64, the surplus of product in the market and the limited number of licensed retailers and distributors that can move and sell the product. The $4 figure is a welcomed relief, however, the tax the amount cannot be amended until the end of the fiscal year which is June 30, 2018. This means that operators will be required to pay the $15 tax for the months of January through June and this may be the breaking point.
The industry as a whole is thankful for the Board of Supervisors opened the channels of communication between the County and the operators by creating the Ad Hoc Cannabis Standing Committee open to the public. It is important to get the message out to your district supervisor through the appropriate channels of communication in an effort to emphasize the necessity of an interim reduction in the tax while the fiscal year runs out. This will allow operators who are already operating to remain in business and will encourage new growth in the open greenhouses that remain available and viable for cultivation but are not being used. It will make Monterey County attractive to outside capital investors and in the long run will increase the County’s tax revenue because more greenhouse square footage will be used for cultivation since it is more affordable.