No action taken on pot tax increase

The Humboldt County Board of Supervisors didn’t take any action Tuesday to halt the scheduled increase of local cannabis taxes.

Taxes are set to increase or decrease each year with the Consumer Price Index, depending on economic inflation rates. Tax rates on each square foot of cannabis cultivation will increase by only a few cents annually, but the resulting overall revenue for the county amounts to nearly $800,000 a year.

“You do have to keep sight of the (revenue losses) and find a way to work around it — something that can help (growers) but also not totally impact the county to such a large extent,” said 4th District Supervisor Virginia Bass.

Noting that the high costs of growing legal cannabis had hampered the market, the supervisors in March had considered stopping tax increases due to inflation.

On Tuesday, board had the option of creating credit for the tax increases, allowing permit-holders to pay them off over time instead of upfront. At county staff’s suggestion, the board also considered refunding last year’s additional tax burden due to the CPI and keep future rate increases in place.

But the supervisors ultimately decided against moving forward with the stay.

“I think looking backwards in time is probably not the best way to go,” said 3rd District Supervisor Mike Wilson. “It appears over 90% of our permitees are paying their taxes on this.”

The ongoing coronavirus pandemic may actually lead to economic deflation, noted Ross Gordon,

policy analyst for the Humboldt County Growers Alliance. Gordon said cash-flow issues in the pot industry necessitated a stay on this year’s tax increase.

Thomas Mulder, CEO of Humboldt Redwood Healing, echoed Gordon, adding that cannabis being federally illegal — and the lack of banking options that emerge from it — should be reason for the board to halt all future CPI increases.

Wilson later responded to Mulder, saying he didn’t see a nexus between cannabis’ federal status and local industry taxes. He also said that halting tax increases for the CPI wouldn’t be a sustainable solution to the cannabis industry’s struggles, adding it may open the door for other businesses seeking tax breaks.

“I would prefer we maintain CPI moving forward and work even harder to provide better services for the value,” Wilson said.

John Ford, the county’s planning and building director, said there were about 200 permits that the county did not extend into 2020 because of delinquency on tax payments.