Board says paying taxes is a requirement for permit renewal
b"April 26, 2022 \\u2014 The Board of Supervisors voted last week to require payment of cannabis taxes to renew permits, and asked the Executive Office to come back at a future meeting with more numbers about what it would mean to lower the tax rate. \\nIn 2016, Mendocino County voters passed Measure AI, an ordinance stating that growers are liable for a 2.5% tax on their gross receipts, which amounts to a yearly minimum of $1200-$5000, depending on the size of the grow. With the price plummeting, the cannabis business sector across the state has been clamoring for tax relief. \\nSupervisor Ted Williams argued for a reduction, saying, \\u201cIt almost doesn\\u2019t matter if theoretically, the arithmetic of however many cultivators we have times about $5,000, what that would generate for us, if we put them out of business.\\u201d \\nCounty staff estimates that currently, $6.8 million in cannabis tax revenue has been uncollected, but between calendars not aligning, a software system that requires an expensive update, and a few missing pieces in the procedure for collecting, hard numbers are hard to come by.\\nSupervisor John Haschak summarized the knowledge gaps, telling his colleagues that, \\u201cI\\u2019m just trying to figure out the implications to our budget if we do this. We have so many unknowns that it\\u2019s really hard to say what\\u2019s going to happen with it. And then if we require tax compliance, at this point, we don\\u2019t know how many people we would make pay who aren't paying right now.\\u201d\\nWilliams asked Acting Treasurer-Tax Collector Julie Forrester how many people in the cannabis program are currently delinquent on paying their taxes. She told him that for the calendar year 2021, there are 551 cultivation permits that are unrecorded, 97 flat tax payments that were unrecorded, and eight dispensaries \\u2014 or about half of the permit holders. \\nForrester said operators will have another tax bill at the end of May, in what\\u2019s called a true-up, \\u201cWhich amounts to a little over $3 million. In my understanding, historically we\\u2019ve collected about half of that true-up. We have that, and then\\u2026we have about $185,000 in the flat tax that\\u2019s unpaid.\\u201d Forrester added that \\u201cthere hasn\\u2019t been any further delinquent collections of defaulted cannabis taxes to date. There\\u2019s been so many changes to the program. There\\u2019s been no actual pursuit so far of the defaulted.\\u201d Forrester told the board that collecting the cannabis tax would not be easy, cheap, or fast. With an audit, she said, her department could estimate which taxes were due, record a lien, and implement collections processes. She added that she would need to know if a lowered tax would be categorized as a reduction or a credit against the taxes due, because that would affect the kind of update she would need to request for the property tax software system. \\u201cAnd I would expect that to be quite a complicated program and with a hefty cost, and not a quick turnaround,\\u201d she cautioned.\\nBut idiosyncratic software is not the only obstacle. Forrester requested more board direction for her department, which she calls the TTC. She said she had requested clarification on the ordinance, particularly what it means that the TTC is allowed to increase the tax; what it means for the TTC to assess penalties and interest; and if it can also waive them.\\nCounty Counsel Christian Curtis explained that since the cannabis tax was a voters initiative, the board can tinker with it to a degree. \\u201cAs long as you\\u2019re keeping the same basic structure, you\\u2019re allowed to go lower,\\u201d he said. \\u201cYou can\\u2019t go above the maximum that the voters approved, and then if you change the tax structure so you\\u2019re no longer going on gross receipts, you know, excise per pound, but if you\\u2019re going lower, you\\u2019re fine,\\u201d he assured the supervisors.\\nMonique Ramirez, of Covelo, thinks it\\u2019s time for the voters to revisit the tax. \\u201cI just think it makes sense to base it on what you\\u2019ve actually sold, and that\\u2019s the percentage that you pay,\\u201d she said. \\u201cJust to give you a glimpse of what it\\u2019s like for me, as a specialty cottage operator, I have only sold six pounds of flower in the market so far, from my 2021 harvest. I am living off my savings. Thank God we have chickens.\\u201d\\nMichael Katz, the Executive Director of the Mendocino Cannabis Alliance, supports a reduction before agreeing that paying taxes should be a condition of permit renewal. When Williams asked him if MCA supports requiring tax compliance; \\u201cin other words, in order to get your permit renewed, you have to pay your taxes;\\u201d Katz replied, \\u201cI think MCA would support this reduction for 2021 through 2023, and with that reduction, I think we would be willing to discuss that\\u2026we should be talking about how to keep people in this program, and not fine them out of it or structurally policy them out of it or overlay them out of it. Let more people in.\\u201d"