Santa Barbara County Cannabis Tax Revenue Dips as Supply Surpasses Demand | Government and politics

Cannabis tax revenue for the first quarter of 2021-2022 is down 25% from the amount collected in the first quarter of the previous fiscal year and 17% lower than that collected in the fourth quarter for Santa County coffers Barbara.

County staff attributed much of the decrease to an overabundance of cannabis in California that prevents growers from selling their product, which in turn fuels a healthy black market.

This black market is also fueled by the state’s high cannabis taxes which keep prices high in legitimate retail stores, leading consumers to turn to illegal dealers, according to staff who delivered the report on Tuesday. first quarter on cannabis on the Supervisory Board.

But 5th District Supervisor Steve Lavagnino, who said he supported the cannabis program because it brought in money, tried to put the tax cut into perspective by noting that it still brought in 3 millions of dollars.

“It is still the county’s second-largest source of income,” Lavagnino said, adding, “We knew that day was coming.”

Steven Yee, tax and policy analyst for the county, said the lack of retail outlets in the state remains a problem for growers as California cannabis cannot be shipped across state borders. .

In response to a question from 3rd District Supervisor Joan Hartmann, County Senior Analyst Brittany Heaton said it was difficult to curb the black market here because the prices of illegally sold cannabis are lower than in stores in detail.

“It’s still a problem, and it’s a statewide problem, not just for our county,†Heaton said, noting that the state has 800 cannabis retail stores, but that to supply the 29 million potential customers, it would take more than 10 times more.

Of the county’s 69 legal operators, a total of 46 reported gross receipts and paid taxes, while 16 reported no gross receipts. That left seven operators who did not report, but Heaton said one of those receipts reported and paid taxes after the reporting deadline.

Another operator has not reported for two consecutive quarters, so the county intends to notify the state that the operator is not in compliance with the regulations, which could result in the loss of its state license.

Supervisors set a cap of 1,575 acres on growing cannabis in unincorporated inland and coastal areas, but permits were approved for 1,860 acres, although permits were only issued for 543 acres. these acres. Yet the proposed permits total 3,173 acres.

Currently, staff are working on an amendment to the ordinance that would remove the processing facilities from inclusion in the cultivated area, but the removal of these operations is not expected to have much impact on the total area.

Heaton said it is expected to be presented to the board in February.

Staff are also looking to resolve the difference between how the state calculates cultivated acres, which are based on the actual canopy of plants, and how the county calculates them, which is based on the size of the growing area. total.

Staff said Tuesday’s report will be the last quarterly report on cannabis presented to the board of directors, as future reports on the cannabis tax, compliance and enforcement program will be incorporated into addenda provided at the meetings. annual budget workshops.

Speaking during the public comments, Marc Chytilo, lawyer for the County Coalition for Responsible Cannabis, objected to this because it will make the program less transparent and more difficult for the public to assess its effectiveness.