When Humboldt County voters approved the Measure S Cannabis Excise Tax in 2016, which charges businesses between $1 and $3 per square foot of cultivation area, the marijuana market looked a lot different. Since then, prices for cannabis have plummeted due to high supply. And optimism among small-plot farmers thinking they could make a profit has given way to worry about just staying afloat.
鈥淢easure S was originally envisioned as a tax that would come out of the bounty that would be associated with legal cannabis. That is not the current circumstance and is unlikely to ever become the situation,鈥� according to a by the county鈥檚 Planning and Building Department.
Humboldt County鈥檚 board of supervisors is aware of the change in market conditions. For the last four years, the county has either suspended or greatly reduced the tax. But according to the county, around 600 growers still owe taxes 鈥� about a third of legal operations.
The deadline to pay that tax or else lose one鈥檚 license was extended to the end of this month.
But on Tuesday, growers lined up to tell the board they needed more time.
Craig Nejedly, CEO of Talking Trees Farms, told the board he鈥檚 paid off more than half of his taxes but still owes around $31,000.
鈥淭here's absolutely no way I'm gonna be able to come up with that before the end of this month. So it'd be putting my farm, my family, my employees out of business essentially,鈥� Nejedly said. 鈥淚 feel like I'm being penalized for going all in on legal cannabis.鈥�
After hearing from concerned local growers, the board again decided to extend the deadline to settle Measure S tax bills. Growers who have entered into a payment plan with the county have until Dec. 31 to pay off what they owe. Those that haven鈥檛 made any payments 鈥� over 200 businesses 鈥� have until April 3 to contribute something or risk losing their license.
Supervisor Natalie Arroyo made clear this would be the last deadline extension.
鈥淲e are repeating this one more time,鈥� said Arroyo, who voted in favor of the new deadline. 鈥淚 am not willing to do it again.鈥�
According to the county, around 76% of active licensed cannabis farmers have paid off their Measure S taxes. Those taxes go to county services, including cleaning up abandoned cultivation sites.
According to the staff report, Humboldt County is still waiving late fees for anyone who pays before the March 31 deadline.
The report goes on to raise questions about whether there is a better approach to cannabis taxation.
鈥淢easure S does not produce the income expected, it is cumbersome to implement, puts additional burdens on farmers, which is arguably not where the tax burden should be placed and is diverting staff time from other things that could be more beneficial to the county.鈥�
