To: Board of Supervisors
From: Supervisor Estelle Fennell
Agenda Section: Initiated by Board Member
SUBJECT:
title
The Impact of Consumer Price Index Related Increases on Cannabis Excise Tax Bills (Supervisor Estelle Fennell)
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RECOMMENDATION(S):
Recommendation
That the Board of Supervisors:
1. Discuss the benefits of imposing a stay on collection of the annual increase on Cannabis Excise Taxes for the 2020 calendar year; and
2. Direct staff to bring back an agenda item with supporting documentation necessary to effectuate a stay on collection of the annual increase Cannabis Excise Taxes for the 2020 calendar year.
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SOURCE OF FUNDING:
General Fund
DISCUSSION:
The Board of Supervisors is supportive of the county's fledgling cannabis industry and is responsive to the concerns raised by cannabis business owners and farmers that the burden of local taxes imposed on their industry disincentivizes compliance and encourages continued black-market cultivation.
In March 2019, to ease the burden of the costs associated with establishing cannabis businesses, the Board voted to modify the cannabis excise tax billing cycle so that the annual billing process takes place in arrears, meaning after the cultivation year instead of during the cultivation year. Accordingly, cannabis businesses budgeted for the expected payments linked to square footage of their permits.
The 2019 tax bills are now due, and farmers are receiving annual bills that include the annual increase linked to the Consumer Price Index (CPI), in addition to the square footage tax rate. Upon receipt of those bills with the extra charges, numerous fledgling cannabis businesses expressed concerns, requesting that the additional CPI charges be removed. In the words of one farmer "roll back the tax increase and allow our industry to get back on firmer footing before increasing taxes at the local level." Another farmer said, "The only real way to combat the black market is to make th...
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