Countywide marijuana growing tax on ballot

Sonoma County voters in March are being asked to approve a tax on cannabis cultivation, which officials say will help pay for the impacts of growing the crop that was recently legalized for recreational use.

Known as Measure A on the March 7 ballot, it faces little opposition as a key industry group says most growers would rather pay a tax than a costlier permitting structure. The Sonoma County Board of Supervisors placed the measure on the ballot in conjunction with an ordinance to regulate the thousands of marijuana growers in the county, who currently operate underground.

The special election comes on the heels of the November poll, in which California voters approved Prop. 64, legalizing recreational cannabis, and authorizing local governments to impose regulatory frameworks.

If passed, Measure A would initially impose a tax of between 50 cents and $5 per square foot for outdoor growers and $1.88 to $18.75 per square foot for indoor cultivators. Larger operations, which in theory create more impacts, would be taxed at the higher end of the scale.

County officials estimate that the new tax would generate more than $6 million in the first year. While the tax would go into the county general fund, officials say they intend to use the revenue to hire the dozens of new workers in the permitting and agriculture departments needed to regulate the industry and to offset impacts on code enforcement and crime.

Supervisor David Rabbitt said it makes sense that the industry bears these costs.

“The attitude of folks is let’s legalize it and tax it,” he said. “This is a way that offsets the legalization locally.”

The measure allows supervisors to raise the tax up to a cap of $10 per square foot for outdoor growers and $38 per square foot for indoor growers, or 10 percent of gross receipts per year.

The Sonoma County Growers Alliance is taking a neutral position on the tax. Tawnie Logan, the group’s executive director, said she would like to see the tax set low initially. She said the county needs to establish a monitoring body to adjust the tax and make sure it does not become too onerous for growers. She added that the upper end of 10 percent is too high.

Logan said that the alternative to a cultivation tax - setting a costly conditional use permit structure - would have amounted to a high barrier to entry for many growers. She said the tax spreads the burden equitably across the county’s cannabis industry.

“It allows for maximum participation,” she said.

Rabbitt said the county took a close look at cannabis regulations in Colorado and Washington, which have had legal marijuana for four years. The county in December passed a sweeping land-use ordinance regulating indoor and outdoor marijuana cultivation, on agricultural and industrial zones across the county. Among other things, the ordinance bans cultivation in rural residential zones outside city limits.

Implementation of the ordinance is tied largely to the success of the cannabis cultivation tax measure.

“It’s a business like anything else,” Rabbitt said. “We want to make sure that other taxpayers aren’t subsidizing this business.”

The Sonoma County Taxpayers Association is not taking an official stance on the measure, but the group’s executive director, Dan Drummond, said he supports the proposal since it is paid for by the industry. He said his concerns with the measure include the fact that it is a general purpose tax, meaning that the county could use the revenue to pay for other priorities. Also, he said he is concerned that it allows supervisors to raise the tax without going back to voters.

But those concerns do not outweigh the fact that this new industry will create impacts on county services, he said.

“There is no doubt that legalization will cause a substantial burden on local government,” he said. “There is a new bureaucratic framework, and that has to be paid for. Industry should probably pay for it.”

(Contact Matt Brown at matt.brown@arguscourier.com.)