California’s Sonoma County is cutting taxes for local cannabis farmers in an effort to aid the industry, which is struggling to survive under county and state tax policies.
The Board of Supervisors unanimously approved a measure March 15 to slash local cannabis growers’ taxes by 45%, retroactive to July 2021 and effective through June 2023, according to The Press Democrat.
During this time, county officials will study the benefits and costs of taxing cultivators by gross receipts rather than square footage, the news outlet reported.
“If we don’t take action, we are killing permitted businesses in this county,” James Gore, chair of the board, told The Press Democrat.
The 45% tax reduction could reduce Sonoma County’s projected annual baseline cannabis tax revenue by $1.64 million, according to the news outlet. County staff originally recommended a 10% reduction to ensure reserves in the county’s cannabis fund, but all five supervisors agreed to more substantial tax relief for cannabis farmers as long as the fund could continue to cover operational costs.
Sonoma County is home to 171 licensed cannabis cultivators, The Press Democrat reported, and they are taxed at different rates based on their square footage of outdoor, indoor and mixed light crops.
Local jurisdictions can also charge an excise tax of up to 15%, according to The Press Democrat, and the state taxes growers by the ounce.
California Sen. Mike McGuire has introduced legislation to end the state’s flat-rate cannabis cultivation tax, and the Sonoma County Board of Supervisors has committed to supporting the bill as long as the state does not reduce the cannabis revenue it earmarks for First 5, the state-chartered organizations that handle local health care and social service issues in early childhood, The Press Democrat reported.