Meeting Time: March 28, 2023 at 9:00am PDT

Agenda Item

3c) Adoption of an Ordinance Amending Sections 6.32.050 and 6.32.100 of the Mendocino County Code to Provide, for Cannabis Cultivation and Nursery Operations, a Reduction in the Cannabis Business Tax for Tax Years 2023 and 2024 and to Establish a Penalty and Interest Amnesty Program and a Prior Year Tax Payment Plan (Sponsor: Supervisor Mulheren)

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    Julie Harris 11 months ago

    I support the Mendocino Cannabis Alliance stance on this item.

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    Jude Thilman 11 months ago

    The cannabis program has generated nearly $36 million in taxes for the county since it started in 2017. If anyone in County government thinks it can raise more tax revenue by allowing small farmers to die out, and inviting large, vertically integrated entities in to take over Mendocino County, they are wrong. 1) At this point, there is little likelihood that large entities can come in and set up hoop houses with thousands of plant, for land use restrictions along. 2) These large operations are owned and run by out of county interests and they will NOT spread their money around to housing, schools, grocery stores, gas stations, etc. They will not contribute to our County's economic development. Not like our multi-generational legacy farmers have and will contribute to their communities. Save our small farmers with an amnesty program and by lifting the cultivation tax. thank you

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    Corinne Powell 11 months ago

    I am writing in support of cannabis tax relief proposed in agenda item 3(c). Cannabis taxes have contributed over $8M to County revenue in the past few years. The tax structure has been under fire since imposed in 2016. Assumptions of then Supervisors was that cannabis was making tons of money for cultivators and the County would benefit from an ill conceived system of taxing permittee based on the size of their growing area. Unfortunately, industry conditions have drastically changed in since 2020 and the permit sized based tax structure has not been adjusted to reflect the reality for farmers. Many farmers are behind in taxes because they cannot operate with the high, outdated compliance costs of fees and taxes. Mendocino County has never applied cannabis taxes as stated in ballot initiative which approved the tax structure. This tax relief action is temporary and intended to allow cultivators to come current with taxes and stabilize their tax burden moving forward. Any farmer attempting to stay in the regulated market needs help and passing this relief now is essential. This Board has inherited the mess of former Boards presuming that cannabis was a "cash cow" and burdonsome taxes were justified. Times have changed, cultivators and MCA are endeavoring to educate not only the current County leadership but also the public the small farmers with no integration into California's agricultural framework with advantages of tax deductions, crop insurance and a normal marketing procedures is NOT the same as typical taxation. Help farmers now. THANK YOU.
    Corinng Powell
    Laughing Farm, a MBC

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    Matt Maguire 11 months ago

    The cannabis tax is a special tax that no other business is required to pay in Mendocino County. If any other business was subject to this tax there would be a huge exodus of businesses leaving this county.
    Please be pro business and pass this ordinance today


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    Ve Taylor 11 months ago

    this only makes sense.

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    Mark Shaffer 11 months ago

    I'm writing in support for Agenda Item 3c) Adoption of an Ordinance Amending Sections 6.32.050 and 6.32.100 of the Mendocino County Code, which is sponsored by Supervisor Mulhern. This type of tax relief is crucial for the survival of the stakeholders who stepped forward on the front lines to be involved with our county cannabis licensing program. We have now seen many of these small businesses fail or come to the brink of shuttering. It is greatly appreciated that your consideration is to find a more reasonable pathway for a successful outcome to help stabilize the cannabis businesses that remain.

    Thank you,
    Mark Shaffer
    5th District

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    Patrick Sellers 11 months ago

    Honorable Supervisors,

    Please find attached a set of tables providing additional information on the fiscal impact of this tax reform proposal.

    Also, consider the following:

    - Penalties and interest on past taxes are ONLY waived if the applicant stays current with the payment plan. Therefore nothing is waived without an increase in revenue from previously uncollectible taxes. If someone falls out of the payment plan, their penalties and interest are re-applied.

    - It is reasonable to assume that the proposed 50% reduction in the tax will lead to an increase in tax compliance. I extrapolated that the $1.5mil cannabis tax estimate for FY 23-24 is based on approximately ~35% tax compliance. Reducing the tax rate may substantially increase compliance, mitigating the reduction in revenue to some extent.

    - This tax reform package will likely prevent some farms from withdrawing from the program, which means it would prevent the loss of tax revenue year after year from those farms.

    - The cannabis tax is excessive and demands far more of cannabis program participants than other comparable industries.

    Thanks for your consideration,
    Patrick Sellers


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    Mary Aigner 11 months ago

    Dear Supervisors,
    I strongly support Supervisor Mulheren's ordinance for cannabis cultivation tax reform & a payment program for those in arrears & I urge you to do the same. The mandatory minimum taxes seemed reasonable in 2017. In 2023 they are onerous for small farmers and out of step with current market realities. The provisions of the ordinance - a temporary reduction in the mandatory minimum, penalty relief & a payment program for those in arrears and re-prioritization for licensing - are necessary if the county is to have a successful cannabis industry based on small legacy farms. Many small farms are already out of business; the economic impacts are evident throughout the county. Those farmers that are left are in urgent need of assistance in the form of tax relief if they are to have a chance to survive and hopefully thrive as the industry matures.
    Please support this pragmatic & necessary ordinance.

    Thank you

    Mary Aigner
    Sol de Mendocino
    Hungry Hollow Enterprises

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    Stan Anderson 11 months ago

    •The marijuana growers have invested years of hard work and copious amounts of money to bring their product to market. For any number of reasons, they have failed to make a profit for their efforts; weather, soil conditions, government policies, taxes, and the big one, competition from large multinational grower combines that undercut our local growers’ prices. But are growers really much different than other mom-and-pop business owners who have been put out of business by weather, wildfires, COVID lockdowns, taxes, changing technology and competition from Amazon, Walmart, COSTCO and other big-box stores and on-line marketers? How many local stores and shops and restaurants have been closed since 2019 alone? It’s called free enterprise; businesses die and others are born. And not all of it is fair but that is reality. And the owners of those small businesses didn’t get any tax amnesty or payment to the growers plans from the county, state or federal governments. Nor is the proposed tax cut fair to all those who paid their taxes as scheduled.

    Retroactively cutting the unpaid taxes of marijuana growers by $2 Million is simply a Gift of Public Funds to the growers. The California gift of public funds doctrine set forth in the California Constitution, Article XVI, §6, prohibits the giving or lending of public funds to any person or entity, public or private. The $2 million loss can only be made up from the General Fund; property taxes and other resources plus sales taxes by business owners for which the taxpayers expect government services in return. Where will the BOS make up the lost $2 million, from libraries?, filling potholes? mental health services? children and senior services? BOS, Vote NO on this misguided tax amnesty ordnance.

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    Stewart Rogers 11 months ago

    It’s not surprising that cannabis taxation is a debacle. In fact, the entire state is recognizing that the pie-in the sky pot projections legalization promised are nothing more than a fiction.
    Legalization was sold to us under the guise that it would abolish the black market while monetizing the pot industry. Well not so fast, now we have both! There are still cartels in mountains and an unknown percentage of growers who are off the grid safely avoiding taxation.
    With this said, I am very skeptical of the amnesty plan the BOS has been discussing over the last few weeks. My biggest concern is that we have NO ASSURANCE that the growers in question will pay once its in place. And if you give this segment of pot growers amnesty then you have to do the same for other bigger, and better funded growers.
    The bottom line is the pot market has shrunk and will continue to shrink. Inflation, gas prices and other market forces will push this segment of pot grower out of business and rightly so -It’s just basic economics.
    If the BOS really wants to spend their time constructively in regard to cannabis, why not work on some guardrails on public use. Legalization seems to have come with an assumed legitimacy that gives cannabis users the right to smoke in public, or while driving, or on the job or simply walking down the street. That’s spectacularly absurd! Think of the exposure to our children!
    And regardless of the hype, pot is not medicine, it’s not therapy or any of the 100 other things the pot industry says it is. Pure and simple its POISON and a drug that the rest of us used to be insulated from in everyday society. Now we can be accosted with pot smoke anytime anywhere. That is wrong and has to change!
    I say we now focus on putting back rules that save the rest of us and our kids from this kind of unintentional exposure. That would be a very positive step forward to the majority of us non-users in Mendocino.

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    Joey Gothelf 11 months ago

    The cannabis farmers of this county have unreasonably high taxes and are a big supporter of our local economy and the legacy of this county. If they are not helped with their tax burdens they will go out of business and our local economy will suffer. They have long been the backbone of many local economies and deserve help. Thank you.

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    Jennifer Procacci 11 months ago

    I am writing in support of the proposed cannabis tax reform. The cannabis industry has been in freefall for several years now. Many licensed farmers in Mendocino County are still struggling to recover from the devastating effects of the August Complex in 2020 which resulted in complete crop loss for many of us due to smoke damage. I myself, the co-owner and co-operator of WildLand Cannabis, lost my entire crop that year, in addition to having my property damaged by wildfire, for which no assistance or compensation was available. This means that I spent thousands and thousands of dollars growing a crop that I could not sell and additionally had to pay taxes Mendocino county on that unsellable crop. Many others are in the same position, still dealing with the 2020 fire financial fall out. This, combined with the extremely high cost of compliance and overall bottoming out of the price of cannabis, has left most of us walking a razors edge. We want to stay in business in Mendocino county, the place we love and have invested greatly in. Please help us to survive these incredibly lean times by approving Supervisor Mulheren’s proposed Cannabis tax reform. It is high time we receive this assistance. Thank you.

    Jenn Procacci
    Co-Owner & Co-Operator
    WildLand Cannabis

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    Tamara Kislak 11 months ago

    I support the proposal brought forth by Supervisor Mulheren for cannabis tax reform to stabilize the community so we can continue to contribute taxes in the future. There is precedent or tax relief for industries in crisis and the cannabis industry is certainly in crisis.

    Also, the significant differences in our underlying tax structure both at the state and federal levels is far different than anything other local businesses have to deal with.

    Thank you for supporting small business in Mendocino County.

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    Jim Roberts 11 months ago

    Honorable Supervisors,

    We fully support the framework and agenda item as is, which Supervisor Mulheren has invested the groundwork and research to seek viable solutions for our local legacy farms in our heritage growing region. This includes a reduction of the current tax structure.

    As an entrepreneur and business owner in the county for over 30 years, as well as a board member of West Business Development Center and one of the 32 member team of CalOSBA economic task force, we need to ease off the burdens of this emerging and promising legal economic sector in our county. Cannabis is the most heavily taxed industries in the state. It is also dominated by an oligopoly of heavily resourced players working very hard to squeeze out the little guy. Our small farms are part of the fabric of our communities and with a turbulent marketplace, we need to do everything possible to retain and support this authentic asset which will offer a great return after the market settles out. California had set out to build a robust and layered framework with proposition 64, but unfortunately it is flawed and has left the small farmer/ cultivator as the one with the least tools for survival. Most of these farms which have become behind on taxes, were unable to move any product during a glut of production or had a distributor that owed them for their harvest close there doors while not paying the farmer for their hard work and product. At the same time, the county has required taxes paid while never processing their permits or moving them to annual licensing. I ask you to take the foot off their necks and seek solutions for survival. Please support this agenda item as well as the letter from MCA without further delay.

    With Respect,

    Jim Roberts
    The Bohemian Chemist
    The Madrones & The Brambles
    Sugar Hill Farm, LLC

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    Monique Ramirez 11 months ago

    Dear Supervisors,

    I think it's important for the general public to know that the cultivation tax is a ridiculous tax only imposed on cannabis businesses in our county. We are required to pay 2.5% of our sales to the county, and in the event you didn't make any sales for that tax year, you still owe a minimum tax amount set at these levels:
    2500 sq ft or less canopy= $1500
    5,000 sq ft canopy= $2500
    10,000 sq ft canopy= $5000

    Many of the farmers that are delinquent on taxes either didn't make any sales due to fires/smoke damage to crops from previous years, or perhaps never received payment from their distributors for products they sold. It's a shame what has happened in regards to farmers not being paid across the supply chain in this industry. Also some distributors have not received payments from the retailers so it just trickles down and ultimately effects the farms.

    So to offer an amnesty program especially in the times we are in now, is a great gesture of support to help our community get back on track. It should also be noted that payment issues are such a problem across the entire industry in California, that there is a cannabis bill being brought forward by the State to address delinquent payments to operators.

    This county program will still require the tax to be paid, but the penalties and interest charges will be waived. So let it be clear that farms still have to pay. I think some of the public comments in opposition are not understanding what is happening.

    NO OTHER businesses are required to give a % of their sales to the county in taxes that I am aware of. But cannabis businesses are happy to pay 2.5%, we just wish it could be on the dollars we actually receive. At some point we need to address this real problem and get a new voter initiative on the ballot to amend our tax ordinance.

    We need parity with other local businesses and to stop being marginalized and discriminated against just for growing a medicinal plant that is helping to regenerate soil, and bring needed healing relief to so many people suffering from ailments.

    I appreciate the effort of Supervisor Mulheren for trying to strike a balance with this tax amnesty program.

    We need to get folks back in the queue for review and perhaps the affidavit pathway may be the ticket to alleviate the concerns raised in the GGC meeting on Monday. As always MCA provides thoughtful recommendations and solutions that should not be overlooked. I want to offer support for the MCA memo submitted for this agenda item.

    Thank you so much for the opportunity to provide public input.

    Monique Ramirez
    District 3
    specialty cottage gardener, mother, advocate

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    Chiah Rodriques 11 months ago

    Dear honorable Supervisors- As a legacy farm in Mendocino County, our family farm is in support of the tax reform. Let's keep farms in business and families working and thriving in Mendocino County!

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    Corine Goubert 11 months ago

    Six mos ago, while walking to the Ft Bragg Farmers’ market, I saw a drug addict pick up a lit butt from a Franklin Street storefront w sidewalk. The addict bent over and picked up the lit butt, I saw him get extremely high. Passing to the right of me I saw his eye balls bulging out of his eye sockets. He looked like a character out of graphic novel. He proceeded to become extremely agitated and yelled to people in the street. Not a healthy scenario. Extremely disturbing. What about fentanyl users contaminating our city parks and streets where dedicated food farmers set up, children and dogs play? Is risk of exposure of fentanyl or any drug including hash worth it ? Can’t we just fix the roads and make our county safe from drugs and wildfires? Please do not allow sale of marijuana in our farmers markets. Respectfully, Corine Goubert

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    Nicholas Smilgys 11 months ago

    I’m asking the board to adopt the recommendations of MCA and the GGC. Providing tax relief is one of many actions that need to happen in order to ensure a healthy cannabis industry and thus a healthy economy in Mendocino county.

    As an employer, dependent on local farms to keep my workers working, I can see that lack of action from the county (on this and many other issues) will directly cause loss of jobs.

    I understand the long term financial issues in Mendocino and while not passing this will potentially result in more revenue now, the long term ramifications will likely result in little to no tax revenue in the future.

    Please do the right thing and give farmers (the backbone of Mendocino’s economy) a tax break. The reality of the situation is that the taxes and fees we face in this industry were too high to start with and based off of imaginary traditional market pricing. It’s time to correct course and give us a workable solution.

    Please reprioritize applicants that have been excluded from the program due to tax delinquency.

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    Monique Ramirez 11 months ago

    Dear Supervisors,
    Please find in the attachment below the MCA memo for this agenda item.
    Thank you!
    -Mendocino Cannabis Alliance

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    Nikki Lastreto 11 months ago

    Dear Board of Supervisors, My husband Swami and I, Nikki Lastreto, strongly support Supervisor Mulheren's recommendation for a Reduction in the Cannabis Business Tax for Tax Years 2023 and 2024 and to Establish a Penalty and Interest Amnesty Program and a Prior Year Tax Payment Plan. Thank you so much for considering and ultimately passing this very important adoption to the Ordinance as it will help many small farmers stay in the program. Thank you.