Instead of completely changing the cannabis tax structure, the Santa Barbara County Board of Supervisors decided to tighten up the existing ordinance — for now.
In a split decision, the board chose Tuesday to work on potential changes to Chapters 50 and 50A — such as implementing a requirement for cultivators holding acreage in the cap to grow and strengthening existing language requiring all transfers between licensed activities to be reportable and taxable — and maintain the extant percentage-based tax rate.
The board instructed staff to work on those options and report back in about six months.
Supervisors Joan Hartmann, Gregg Hart and Steve Lavagnino voted for this option. Supervisors Das Williams and Bob Nelson did not.
“I think we’re not doing enough to catch the scofflaws, and we’re missing an opportunity,” Supervisor Williams said.
He had floated a hybrid tax structure that would impose a penalty for those claiming not to be growing but keep the current taxation method predominantly the same.
Supervisor Nelson said he supported a square foot or unit tax.
“I think right now our tax system is too complex,” he said. “I think even when we get through audits, we’re going to end up in litigation with some of these growers, and I think it’s frustrating. … I think the public should have a reasonable understanding of what’s going on out there, and we don’t, and we’re the people that should.”
Ahead of the vote, Supervisor Lavagnino expressed how much of a kerfuffle the taxation process has caused, noting there was “no perfect solution,” in his opinion.
“I think the idea of going after people who aren’t paying their taxes is the reason we’re doing the auditing,” he said. “I think the best thing is to take a step back, continue the enforcement, continue the auditing.”
Staff, in its presentation to the board Tuesday morning, recommended maintaining the current taxation method while allowing Chapters 50 and 50A to potentially be amended for further compliance and clarification.
Santa Barbara County is in the midst of working with a consultant on cannabis financial monitoring and audit services while the Treasurer-Tax Collector’s Office will review the audit’s findings, according to an agenda report.
In addition to the staff recommendation, the board was presented with two alternate options: Develop a tax structure based on cultivation area by square foot or create a hybrid model with a minimum tax on cultivation by square foot.
There were concerns expressed about how a flat tax rate based on cultivation area could be financially straining for companies due to market fluctuations, potentially resulting in more taxes being owed than revenue brought in during some years.
However, that option could provide more certainty for annual revenue projections and be more easily monitored for tax compliance, according to an agenda report.
“I suspect that the tax is not the biggest impediment to processing,” said Supervisor Hart. “It is the building permit that is required for the new structures, which is a long-standing, very difficult challenge we have, and I don’t know if we have an easy path or solution to that either.”
Additionally Tuesday, the board adopted a resolution proclaiming May as Asian American and Pacific Islander Heritage Month in Santa Barbara County. The proclamation was particularly poignant as it underscored the recent church shooting in Orange County carried out by a Las Vegas resident police said was motivated by his hatred of Taiwanese people.