Sonoma County receptive to cannabis growers demands for tax relief

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After testimony from about two dozen cannabis growers, Sonoma County officials appeared close to offering some tax relief, ahead of an overhaul of cannabis regulations likely more than a year away.

That relief, likely in the form of postponing taxes due for 90 days, is expected to return for consideration on January 25.

On Jan. 5, the county board of supervisors heard tales of financial hardship. Growers lament that cratering wholesale prices, and high taxes and fees, are crushing them. Andrew Douglas Gardner was among them.

"The cost of processing, the cost of the square footage tax put my cost of cannabis to be a little over $320 just to get the cannabis processed and to pay the cultivation square footage tax," Gardner said. "At that point, unless I am selling the cannabis for $325, it made more sense for me to destroy and waste all of the cannabis at the end of the season, rather than try to sell it."

Grower Vince Scholten, who leads a small association, said inaction will have consequences.

"If you folks are going to continue to treat us as criminals, then the industry will go back into the black market, and those folks are never, ever coming back into the legal market," Scholten said.

The crux of the matter, according to growers and county officials: tax rates were set when a pound of legal cannabis was going for twelve hundred dollars. Now, it's wholesaling for three hundred.

Grower Eric Pearson said declining prices and static taxes have changed the economics of legal cannabis farming.

"Most of these farmers, including myself, lost money this year," Pearson told the board.

Some cultivators predict that barring major changes, many growers would simply go underground.

The Sonoma County supervisors acknowledged a problem exists, and say they'd consider shifting how taxes are calculated. That may be in the form of an ordinance or motion suspending tax collections, penalties and interest for the quarter, though the money will still be owed. Elected officials say the county still needs the revenue for administrative costs.

Supervisors Susan Gorin and David Rabbitt acknowledged that taking separate state taxes and fees into account,

authorities may have been too ambitious in setting rates.

Supervisor Lynda Hopkins expressed confidence a solution would be found.

"If we just tax the heck out of everything, everybody's going to go back into the black market. Which is essentially punishing the folks who are doing the right thing," said Hopkins.

Saying he was open to postponing quarterly taxes, Rabbitt added that revenue is still needed.

"It's a cash flow issue for the county. It's not going to be a suspension of the costs that we're incurring on a daily basis, so I just worry how you pay your bills, going forward," he said.