Pubdate: Thu, 09 Jul 2015
Source: North Coast Journal (Arcata, CA)
Copyright: 2015 North Coast Journal
Author: Thadeus Greenson


Marijuana PAC Unveils Tax Proposal

Through months of discussion and seven drafts of a proposed marijuana 
cultivation ordinance, California Cannabis Voice Humboldt has 
promised that a revenue generating proposal was coming. In a July 7 
presentation to the Humboldt County Board of Supervisors, the 
political action committee delivered, presenting the board with a 
draft excise tax initiative it says could generate millions for county coffers.

A week earlier, CCVH members stood on the courthouse steps and 
triumphantly announced the release of the final draft of the group's 
proposed land use ordinance to govern grows on parcels larger than 5 
acres ("Draft Day," July 2). The ordinance would principally permit 
existing grows with canopies of up to 10,000 square feet, while 
requiring conditional use permits for new operations or larger ones, 
and would put all commercial grows under the purview of the county 
agricultural commissioner, which would require annual inspections and 
proof of a variety of licenses from state agencies.

Bruner presented the basics of the draft to the board but also 
unveiled the group's revenue-generating proposal, which would have 
growers pay the county an excise tax of 50 cents per square foot on 
growing operations with canopies between 600 and 6,000 square feet 
and $1 per square foot on larger grows. Operations with canopies 
smaller than 600 square feet wouldn't be taxed, and canopies would be 
measured at their largest point in the year. How much revenue this 
proposal would actually generate amounts to guesswork, but Bruner 
proffered it could fetch the county $8 million to $10 million in the 
first year.

Data quantifying the number and scale of marijuana cultivation 
operations within Humboldt County is hard to come by. In 2012, the 
Humboldt County Sheriff's Office spent some time with Google Earth 
and identified more than 4,100 outdoor marijuana gardens in the 
county, but officials say the numbers have increased substantially 
since. In his presentation, Bruner estimated the number to be between 
8,000 and 10,000. Last year, a study by environmental scientists at 
the California Department of Fish and Wildlife looked at grow 
operations in several local watersheds and estimated the average 
canopy size to be about 2,300 square feet.

If we use the DFW numbers as an average, the excise tax proposal 
could generate $4.7 million in revenue for the county, based on the 
Sheriff's Office's 2012 numbers. If we use Bruner's 8,000 figure, the 
revenue could jump to $9.2 million. But, that's assuming the 
2,300-square-feet average holds true across the county and - perhaps 
more of a stretch - that all growers jump on the tax bandwagon.

The proposed tax ordinance designates the county agricultural 
commissioner as the "tax administrator," meaning he or she would be 
responsible for both assessing the taxes and collecting them (they'd 
be due July 1 of every year), as well as taking enforcement actions 
when necessary.

On the surface, this appears to be a massive undertaking for the 
county agricultural commissioner's office, which currently has a 
staff of six, yet would be tasked with certifying, inspecting, 
overseeing, assessing and taxing all the county's cannabis farms. 
Agriculture Commissioner Jeff Dolf has repeatedly declined to comment 
on the proposed ordinance and did not immediately return calls 
seeking comment for this story.

During his presentation, Bruner mentioned in passing that a cannabis 
farmer could reasonably expect to harvest between three and five 
pounds of processed marijuana for every 100 square feet of canopy, 
which would mean a grow with a 10,000-square-foot canopy could 
reasonably generate 400 pounds of market-ready marijuana bud. If sold 
for $2,000 a pound, that would generate about $800,000 in gross 
revenue with a tax bill of $10,000, or 1.25 percent. Using the same 
method, the grower with a 2,300-square-foot canopy could expect to 
yield about 92 pounds, which could fetch about $184,000 on the market 
with a tax bill of $1,150, or 0.6 percent. Of course, theoretically, 
newly licensed and legitimized growers would also be paying sales and 
income taxes, generating additional state and local revenue.

But many think the revenue conversation is putting the cart before 
the horse, and during public comment after Bruner's presentation, 
former Humboldt Area Foundation Executive Director Peter Pennekamp 
accused CCVH of "immorally" telling the county to "get on the money 
train" while ignoring the environmental and social devastation 
brought by the local marijuana industry.

The comments of Pennekamp and others at the meeting seem to 
underscore a philosophical divide in this regulation conversation. 
During his presentation, Bruner made very clear that CCVH's ordinance 
is designed to prompt voluntary compliance from the growing industry. 
The idea is it gives growers a chance to legitimize and survive on a 
changing landscape as California likely enters the post-legalization 
world. Bruner said he will consider the ordinance successful if it 
brings 5 percent of county growers into the fold in its first year.

"If 500 people come in, I think we'll be successful," Bruner said, 
adding that he thinks market forces will then push more people toward 
compliance as growers following the rules become less tolerant of 
those who are skirting them, viewing them as "unfair, illegal competition."

But many in the environmental community feel that a county ordinance 
should first and foremost seek to rein in existing grows, in part 
through additional enforcement. Legitimizing Humboldt's existing 
growing operations while bringing the top 5 percent of growers into 
7compliance won't do anything to cure the environmental crisis going 
on in the hills, they say.

"To have an industry that is trying to legitimize large-scale 
operations - it's entirely irresponsible," Northcoast Environmental 
Center Executive Director Dan Ehresman said.

Ehresman's comment underscores another huge divide in the 
conversation - canopy size. Many in environmental groups say a 
10,000-square-foot canopy is huge, while Bruner refers to it as a 
"mom and pop" operation or a "micro-farm," noting, "10,000 really 
isn't that big. There's giants out there."

With its July 7 presentation, CCVH kicked off a 45-day public comment 
period during which people can review the ordinance on CCVH's website 
( and submit feedback. After the comment period, 
CCVH plans on incorporating comments into a final version before 
launching an ordinance initiative process in which it would have to 
gather signatures from about 7,400 registered voters in support of 
the ordinance to put it before the board, which could then adopt it 
as written or send it to county voters in November.

Bruner said on July 7 that CCVH would welcome the board's launching a 
parallel process, taking CCVH's work to date and building on it. But 
that idea seemed to get no traction on the board. Supervisor Mark 
Lovelace made a motion asking the board to query county department 
heads for input on the draft ordinance, but his colleagues 
unanimously felt that unnecessary, saying department heads would 
weigh in as they see fit and the board would see where the process 
lands in 45 days.

Meanwhile, Supervisors Ryan Sundberg and Estelle Fennell continue to 
work both with CCVH and on a proposed ordinance of their own, the 
details of which haven't been made public. CCVH is a private 
political group, not a public agency, so there's nothing forcing it 
to make public the comments it receives on the draft ordinance. But 
Supervisor Virginia Bass asked that the group opt to do so, and 
Bruner said he'd forward that request on to the person in charge of 
the group's website.

For his part, Supervisor Rex Bohn made clear he's not ready to hitch 
the county's wagon to what CCVH has proposed.

"I think you've got a long, long way to go," he said, though he 
quickly echoed the comments of some colleagues and members of the 
public thanking CCVH for jump starting a dialogue on the issue. "You 
guys jumped into the water to see how deep it is ... Right, wrong or 
indifferent, it's started a conversation."
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MAP posted-by: Jay Bergstrom