4f) Discussion and Possible Action Including Introduction and Waive First Reading of an Ordinance Amending Chapter 6.32 - Cannabis Business Tax to Add Section 6.32.055 - Relief From Minimum Tax - Notice and Affidavit of Fallowing
(Sponsors: County Counsel and Cannabis)
I am writing in support of The MCA's position regarding the True Up Tax/Fee. I believe their position is more than reasonable and I would assert that it doesn't go far enough. I hope changes are coming.
Fallowing is an imperative component to our cannabis program and I'm pleased to see this ordinance language being brought forward at this time. It's clear we need more flexibility for small farms struggling in such an unpredictable market. Farmers need to have this flexibility to fallow especially because the way 10A.17 is currently written. As it stands, if farmers in resource lands (Timber Production Zone, Forest Land or Range Land) ever stop their operations and need to take some time off, then they lose their ability to reinstate their county permit FOREVER!!! This is a provision not applied to any other agricultural activity taking place in Mendocino County. If a vineyard decides to not plant grapes for a season, it doesnt limit them from ever being able to plant again. And to my knowledge, cannabis is the only crop that imposes a minimum sales tax even if a crop is not sold or grown.
Fallowing provides relief to struggling farmers, and gives them an opportunity to weather hardships, (examples could include: recovery from a disaster such as a fire or health related injuries or issues). Making life more difficult for legal farms isn't going to stop illegal cultivation. In fact it might just encourage it. I hope that every Supervisor will vote in favor of fallowing and also consider adding flexibility around when a farmer can choose to designate a fallowing period to begin and not impose limitations for how long someone can fallow for. MCA continues to provide clear recommendations that offer solutions and should be considered when voting on this agenda item.
I support the recommendations put forth by the MCA regarding tax relief and Fallowing. When cannabis when’s legal every agency had Dollar signs in there eyes thinking this industry would be a cash cow for them and they put in high tax rates and taxes no other ag business has to pay. At this time a farmer is lucky to get half the price they got the first year of operation. With minimum taxes and high tax rates and low prices there is no way to survive in a legal market without some change and tax relief. Fallowing should be an option for cannabis farmers as it is in any other ag business especially with the drought and restriction on water deliveries. Thank you for considering the MCA recommendations.
The cannabis industry wants to be treated like 'any other ag crop' as stated by Michael Katz in public comment just a few weeks ago, yet they continually expect special treatment. No other ag crop or industry in the county receives subsidy or tax breaks from the county, why should cannabis? Cattle ranchers, timber/logging companies, vineyard owners don't receive a tax break from MENDOCINO COUNTY if their industry suffers from a "price drop". Why should cannabis? The answer isn't constantly cutting corners on the legal industry - the answer is getting rid of the illegal industry that is causing the problem. The county needs to focus it's time, energy, and money in getting the black market of this industry under control. Only then will a legal cannabis industry succeed. Fallowing isn't a solution. It is just a band aid that will do nothing to solve the problem.
Fallowing is needed now more than ever due to the changing markets & the climate crisis. Rice farmers are receiving money from the State of California to fallow this year due to drought. Soy & corn farmers in the midwest have been receiving Federal subsidies for decades due to oversupply, etc. We are not asking for a payout. We are asking to be allowed to fallow & not be penalized. To not to owe fees & taxes on crops not grown. To not jeopardize our standing with County & State permitting & licensing while fallowing.
As for taxes, the Governor just released a statement last Friday with plans to eliminate the cannabis cultivation tax as soon as next month in his budget trailer bill. We believe Mendocino should consider something similar & eliminate the mandatory minimum tax. Humboldt, Lake & Sonoma counties have all decreases their cannabis taxes. Tax us on what sell, when it sells, please.
Support MCA memo. Thank you for continued efforts to build a new industry here in our county. Laura & Marty Clein, Martyjuana™
The option of fallowing for a single or multiple growing season is a time-honored tradition in the history of agriculture. MCA offers recommendations for amending the County’s fallowing program to make it simple and more workable for current cultivation realities.
Environmental, regulatory, political and economic conditions are not only different than they were when this County’s ordinance was created, but conditions are now much more dire, with more farmers than ever before needing to remain fallow for at least one growing season due to issues from market volatility to drought and everything in between. It is critical that the County make the fallowing process and outcome as easy as it can be so as not to reproduce the difficult and costly requirements that caused small farmers to have to fallow in the first place.
Overall, MCA supports the intent of the changes considered today in Ch. 6.32.055 -- Relief From Minimum Tax -- Notice and Affidavit of Fallowing. Below we provide specific suggestions as to how to improve the proposed ordinance revision to make it more useful for the County and any fallowing operators:
Proposed Recommendations to Create a More Effective Fallowing Program
- Allow fallowing to occur for any length of time and at ANY time during the permit OR application period;
- Allow applicants to continue fallowing on an annual basis and provide a simple “Continue to Fallow” form for ease of use;
- Ensure that filing Non-Cultivation and/or Stay of Application or CEQA processing does not result in loss of local authorization to the State;
- Permit and CEQA Processing and Review can occur while fallowing and applicants do not lose their place in line or elect to pause those processes;
- Create a streamlined resubmission process if either application or CEQA processing is paused;
- Cultivators using light deprivation techniques should be allowed to fallow by reducing their number of harvests. For this purpose the Notice of Fallowing should include a section for Light Dep identifying number of harvests when Fallowing compared to number of harvests in a Non-Fallowing year.
- Allow applicants that receive notice of permit denial to file BOTH a Notice of Non-Cultivation AND a Notice of Application Stay to prevent denial. While the applicant may have to continue to fallow for a variety of reasons (market conditions, finances, family needs, etc.), they should be able to continue to fallow but have their application returned to the queue for processing after any correction is made.
We support the change in fallowing regulations so that cultivators only pay taxes for the area they are cultivating.
Restrictions to Remove:
- Do not require applicants to attest to their gross sales from the previous year on the Affidavit to Fallow. County Treasurer and Tax Collector Shari Schapmire testified to the BoS years ago that there is no reason to impose “proof” tests on the cannabis community’s individual incomes and tax liabilities. The IRS takes U.S. taxpayers’ signatures as proof enough of accurate reporting. The cannabis operators who are stepping away from the financial promise of the illicit market and voluntarily take on the difficulties, stress and strain of becoming permitted, licensed, regulated, and competitively able to survive in this marketplace -- it is insulting to impose this additional component to the proposed Affidavit process as it assumes that there is a need to re-attest to previously submitted documentation.
- Section A(2) should be revised to make clear that fallowing can be allowed at ANY time during the permit OR application period. - We recommend removing the limitation that fallowing can only happen at the beginning of a calendar year or within 30 days of the passing of this ordinance.
We further propose as part of the Notice of Application Stay or Non-Cultivation that the Board Create a mechanism for cultivators who file a Notice of Non-Cultivation or Notice of Application Stay to keep specific genetics alive through their registration in METRC which subjects them to inspection by the state. This protects our County’s legacy by protecting the right to maintain genetics pursuant to reasonable limitations and strict reporting requirements (METRC) without the ability to sell genetics registered as maintenance cultivation/plant growing.
MCA looks forward to the time when cannabis is considered agriculture and taxes are based on sales instead of cultivation size. Federally, “Big Ag” is subsidized to not grow to support artificially high prices. The state offers grants to farmers suffering crop losses due to drought. Cannabis gets no such support.
Although Mendocino County’s cannabis ordinance, 10A.17, is the only ordinance we’ve got, MCA urges the Board to work with us and other stakeholders to develop a more reasonable tax system which would then be brought to the voters of the County as a unified collaborative solution. In a similar way to the state’s current slow “course correction” for Proposition 64, Mendocino County has the responsibility to update and correct its ordinance as issues arise. Thankfully, MCA stands ready to both provide on-the-ground insight of these critical issues, and to support the County in the development of solutions.
I am writing in support of The MCA's position regarding the True Up Tax/Fee. I believe their position is more than reasonable and I would assert that it doesn't go far enough. I hope changes are coming.
Honorable Supervisors,
My name is Christina Colangelo, cannabis farmer, 3rd District.
I wholeheartedly support what MCA is proposing.
Thank You
Dear Board of Supervisors,
Fallowing is an imperative component to our cannabis program and I'm pleased to see this ordinance language being brought forward at this time. It's clear we need more flexibility for small farms struggling in such an unpredictable market. Farmers need to have this flexibility to fallow especially because the way 10A.17 is currently written. As it stands, if farmers in resource lands (Timber Production Zone, Forest Land or Range Land) ever stop their operations and need to take some time off, then they lose their ability to reinstate their county permit FOREVER!!! This is a provision not applied to any other agricultural activity taking place in Mendocino County. If a vineyard decides to not plant grapes for a season, it doesnt limit them from ever being able to plant again. And to my knowledge, cannabis is the only crop that imposes a minimum sales tax even if a crop is not sold or grown.
Fallowing provides relief to struggling farmers, and gives them an opportunity to weather hardships, (examples could include: recovery from a disaster such as a fire or health related injuries or issues). Making life more difficult for legal farms isn't going to stop illegal cultivation. In fact it might just encourage it. I hope that every Supervisor will vote in favor of fallowing and also consider adding flexibility around when a farmer can choose to designate a fallowing period to begin and not impose limitations for how long someone can fallow for. MCA continues to provide clear recommendations that offer solutions and should be considered when voting on this agenda item.
Thank you,
Monique Ramirez
District 3
Dear Board of Supervisor
I support the recommendations put forth by the MCA regarding tax relief and Fallowing. When cannabis when’s legal every agency had Dollar signs in there eyes thinking this industry would be a cash cow for them and they put in high tax rates and taxes no other ag business has to pay. At this time a farmer is lucky to get half the price they got the first year of operation. With minimum taxes and high tax rates and low prices there is no way to survive in a legal market without some change and tax relief. Fallowing should be an option for cannabis farmers as it is in any other ag business especially with the drought and restriction on water deliveries. Thank you for considering the MCA recommendations.
Board of Supervisors,
The cannabis industry wants to be treated like 'any other ag crop' as stated by Michael Katz in public comment just a few weeks ago, yet they continually expect special treatment. No other ag crop or industry in the county receives subsidy or tax breaks from the county, why should cannabis? Cattle ranchers, timber/logging companies, vineyard owners don't receive a tax break from MENDOCINO COUNTY if their industry suffers from a "price drop". Why should cannabis? The answer isn't constantly cutting corners on the legal industry - the answer is getting rid of the illegal industry that is causing the problem. The county needs to focus it's time, energy, and money in getting the black market of this industry under control. Only then will a legal cannabis industry succeed. Fallowing isn't a solution. It is just a band aid that will do nothing to solve the problem.
Fallowing is needed now more than ever due to the changing markets & the climate crisis. Rice farmers are receiving money from the State of California to fallow this year due to drought. Soy & corn farmers in the midwest have been receiving Federal subsidies for decades due to oversupply, etc. We are not asking for a payout. We are asking to be allowed to fallow & not be penalized. To not to owe fees & taxes on crops not grown. To not jeopardize our standing with County & State permitting & licensing while fallowing.
As for taxes, the Governor just released a statement last Friday with plans to eliminate the cannabis cultivation tax as soon as next month in his budget trailer bill. We believe Mendocino should consider something similar & eliminate the mandatory minimum tax. Humboldt, Lake & Sonoma counties have all decreases their cannabis taxes. Tax us on what sell, when it sells, please.
Support MCA memo. Thank you for continued efforts to build a new industry here in our county. Laura & Marty Clein, Martyjuana™
Honorable Supervisors:
The option of fallowing for a single or multiple growing season is a time-honored tradition in the history of agriculture. MCA offers recommendations for amending the County’s fallowing program to make it simple and more workable for current cultivation realities.
Environmental, regulatory, political and economic conditions are not only different than they were when this County’s ordinance was created, but conditions are now much more dire, with more farmers than ever before needing to remain fallow for at least one growing season due to issues from market volatility to drought and everything in between. It is critical that the County make the fallowing process and outcome as easy as it can be so as not to reproduce the difficult and costly requirements that caused small farmers to have to fallow in the first place.
Overall, MCA supports the intent of the changes considered today in Ch. 6.32.055 -- Relief From Minimum Tax -- Notice and Affidavit of Fallowing. Below we provide specific suggestions as to how to improve the proposed ordinance revision to make it more useful for the County and any fallowing operators:
Proposed Recommendations to Create a More Effective Fallowing Program
- Allow fallowing to occur for any length of time and at ANY time during the permit OR application period;
- Allow applicants to continue fallowing on an annual basis and provide a simple “Continue to Fallow” form for ease of use;
- Ensure that filing Non-Cultivation and/or Stay of Application or CEQA processing does not result in loss of local authorization to the State;
- Permit and CEQA Processing and Review can occur while fallowing and applicants do not lose their place in line or elect to pause those processes;
- Create a streamlined resubmission process if either application or CEQA processing is paused;
- Cultivators using light deprivation techniques should be allowed to fallow by reducing their number of harvests. For this purpose the Notice of Fallowing should include a section for Light Dep identifying number of harvests when Fallowing compared to number of harvests in a Non-Fallowing year.
- Allow applicants that receive notice of permit denial to file BOTH a Notice of Non-Cultivation AND a Notice of Application Stay to prevent denial. While the applicant may have to continue to fallow for a variety of reasons (market conditions, finances, family needs, etc.), they should be able to continue to fallow but have their application returned to the queue for processing after any correction is made.
We support the change in fallowing regulations so that cultivators only pay taxes for the area they are cultivating.
Restrictions to Remove:
- Do not require applicants to attest to their gross sales from the previous year on the Affidavit to Fallow. County Treasurer and Tax Collector Shari Schapmire testified to the BoS years ago that there is no reason to impose “proof” tests on the cannabis community’s individual incomes and tax liabilities. The IRS takes U.S. taxpayers’ signatures as proof enough of accurate reporting. The cannabis operators who are stepping away from the financial promise of the illicit market and voluntarily take on the difficulties, stress and strain of becoming permitted, licensed, regulated, and competitively able to survive in this marketplace -- it is insulting to impose this additional component to the proposed Affidavit process as it assumes that there is a need to re-attest to previously submitted documentation.
- Section A(2) should be revised to make clear that fallowing can be allowed at ANY time during the permit OR application period. - We recommend removing the limitation that fallowing can only happen at the beginning of a calendar year or within 30 days of the passing of this ordinance.
We further propose as part of the Notice of Application Stay or Non-Cultivation that the Board Create a mechanism for cultivators who file a Notice of Non-Cultivation or Notice of Application Stay to keep specific genetics alive through their registration in METRC which subjects them to inspection by the state. This protects our County’s legacy by protecting the right to maintain genetics pursuant to reasonable limitations and strict reporting requirements (METRC) without the ability to sell genetics registered as maintenance cultivation/plant growing.
MCA looks forward to the time when cannabis is considered agriculture and taxes are based on sales instead of cultivation size. Federally, “Big Ag” is subsidized to not grow to support artificially high prices. The state offers grants to farmers suffering crop losses due to drought. Cannabis gets no such support.
Although Mendocino County’s cannabis ordinance, 10A.17, is the only ordinance we’ve got, MCA urges the Board to work with us and other stakeholders to develop a more reasonable tax system which would then be brought to the voters of the County as a unified collaborative solution. In a similar way to the state’s current slow “course correction” for Proposition 64, Mendocino County has the responsibility to update and correct its ordinance as issues arise. Thankfully, MCA stands ready to both provide on-the-ground insight of these critical issues, and to support the County in the development of solutions.
Sincerely,
Mendocino Cannabis Alliance
e: info@mendocannabis.com