County aims to ‘keep rates low’
Measure A, a tax on medical and recreational cannabis businesses located in unincorporated Sonoma County, passed Tuesday with more than 70 percent voter approval.
With its approval, Measure A will tax cannabis operators, including manufacturers, nurseries, distributors, transporters, labs and dispensaries at a maximum 10 percent of gross receipt sales. Starting tax points for supply chain operators would be 5 percent for manufacturers and 0 percent for all others.
Cultivators will also be taxed at a maximum rate of $10 per square foot for outdoor operations, $38 per square foot for indoor cultivators and $22 per square foot for mixed-light operations.
The tax revenue will go into the county’s general fund and is meant to address costs associated with regulating the new industry approved by statewide ballot proposition last November. It is unknown how much those costs will be or when the county will begin taxing pot businesses.
“It’s important to generate enough revenue to cover county costs, but also keep the rates low enough to encourage small businesses to come into compliance,” said Fifth District Supervisor Lynda Hopkins, who serves on the county’s medical cannabis ad hoc committee.
Hopkins said she and First District Supervisor Susan Gorin, who also serves on the ad hoc committee, will create a recommendation to the full board regarding the specific tax rates.
Once tax rates are set, the county will be able to issue permits to businesses, according to a staff report to supervisors on Dec. 6.
Most city councils are moving to create their own businesses taxes that will apply within incorporated areas. Santa Rosa will hold its election on the issue June 6.
The Sonoma County Growers Alliance, which presented the only vocal opposition to the measure, had objected contending excessive rates would harm small growers and exceed profitability for many boutique cultivators and operators.
“It is critical that we keep initial tax rates low to enable as many operators as possible to enter the regulated marketplace,” said Denny Rosatti, growers alliance board member.
Rosatti said SCGA will work closely with the county and cannabis business community to ensure transition to taxes and permits is smooth.
Industry insiders, including Craig Litwin, principal of the Sebastopol-based cannabis consulting firm 421 Group, wasn’t surprised by the results.
“Without a [formal] opposition campaign and low voter turnout, Measure A was likely to pass,” Litwin said. “It’s easy for voters to pass a cannabis tax as it impacts most people indirectly. Hopefully supervisors will keep the tax rate low and consistent, allowing a regulated industry to take root.”
Although some late absentee ballots remain to be counted, Tuesday’s election was a low turnout by all standards. In unofficial returns, only about 29 percent of Sonoma County’s 271,926 registered voters cast ballots.
