Supporters of Measure A, a proposed commercial cannabis tax headed to Trinity County voters on the March 3 ballot, believe its passage will pay the way toward greater law enforcement, public safety and improved county services. Its opponents believe it will kill the legal cannabis industry within Trinity County and encourage an already thriving black market.
The ballot initiative was drafted and circulated last fall by its proponent, John Fenley, the current District 5 county supervisor acting on his own behalf as a county citizen and not a member of the Board of Supervisors.
Measure A seeks to establish a cannabis cultivation tax of $0.85 per square foot for 2,500 square feet or less of licensed outdoor/mixed canopy area, and $1.45 per square foot for 2,501 square feet or greater of growing area. It would also create a gross proceeds tax of 7 percent on the manufacturing of cultivated cannabis; and a gross proceeds tax of 7 percent on medicinal or legal cannabis storefronts and collectives. The tax revenue generated would be used for general governmental purposes, making it a general tax subject to approval by a simple majority vote.
During his tenure on the Board of Supervisors, Fenley has participated in previous efforts including an ad hoc committee of himself and Sup. Bobbi Chadwick to develop a cannabis tax to submit to voters, most recently in 2017 when there were only four board members due to a resignation. With a four/fifths vote required to move any measure forward to the ballot, and only three members in favor (Chadwick was opposed), it never happened. There was a board vote in July 2017 to table the previous tax measure for additional input, but it never came back.
Before drafting Measure A and beginning the ballot initiative process on his own, Fenley said, “I waited for somebody to come forward with a proposal. We are the last California county that allows commercial cannabis to add a cannabis tax. There’s no chance of it with our current Board of Supervisors so I removed the board from it and went forward on my own.”
He said the county’s general fund only comes from property taxes and a small amount from sales taxes currently, and he is wary whether cannabis farmers “are here to stay. They don’t seem to get together to be able to move forward and people have walked away from properties, leaving behind a mess and my property value goes down, so I put together a tax.”
In a recent community forum on the March 3 ballot measures hosted by the Trinity Action Association in Weaverville at the Trinity Alps Performing Arts Center, Fenley said to the crowd that the yes or no decision on Measure A “is now up to you instead of five supervisors who don’t represent you that well. I’m here as a private citizen. I see no good revenue base for the county. It’s been flat for the past six years. I don’t know where new revenue will come from. Our schools and ambulance are in dire straits, and I don’t believe the county will survive without a new revenue source.”
For the sake of comparison, Fenley said he provided a link on his website www.TCballot.com showing what the other counties with commercial cannabis licensing programs have adopted in the way of tax measures. They are all over the map and difficult to compare as taxes involve some portions of the activities, but not others and rates differ widely, in some cases regardless of whether cannabis is grown on a property or not.
Trinity County currently collects fees from commercial cannabis licensing applicants, but no taxes. Fees are only intended to cover the cost of the program that includes a share for code enforcement plus an additional annual contribution toward a future update of the county’s general plan that pre-dates any mention of cannabis activities.
The current county cap on licenses is 530, but only about 300 have been issued. It is estimated that Measure A would currently generate approximately $4.2 million in general fund revenue from 300 licenses and possibly as much as $9.1 million with all 530 in play. As to what it would cost the farmers, Fenley gave an example of a 3,000-square foot licensed canopy area costing $4,350 regardless of whether one, two or three crops are grown on it during the year.
As general fund revenue, the money would be spent at the discretion of the Board of Supervisors, “so let them know what you want,” Fenley said.
He’s proposed that the money could be spent for better law enforcement by hiring more patrol officers; providing better public safety for communities; providing better and wider ranging county services; increasing the county’s ability to successfully apply for state and federal grants that require matching funds the county can’t currently afford; promoting Trinity County to attract more visitors and creating a reserve fund for capital improvements, among other ideas.
Many cultivators attending the TAA forum spoke against Measure A, arguing it would force them to pay taxes on crops before they are harvested, not allowing for anything that might go wrong.
“Most counties and the state are shifting away from higher taxes. We have been hamstrung in how to move forward in Trinity County while others at least have a pathway,” said one.
“We are the poorest county. Mendocino and Humboldt (used earlier for tax comparisons) have economies and we don’t. Most do not tax businesses out of the economy. If you kill this industry, we are done,” said Terrence Mines of Junction City. He argued that the licensed cannabis farmers in Trinity County are not given due credit for the money they contribute to the local economy, including over $1 million so far for an update of the county’s general plan.
Fenley responded that the money collected in permit fees must stay within the agency doing the work and can’t be used for general expenses like hiring more deputies.
Adrian Keys of Hayfork argued that a recent state analysis concluded that over-taxation and over-regulation are the main reasons the illegal black market for cannabis is thriving.
“A cultivation tax is the worst type of tax. It’s like asking timber companies to pay a stump fee before they cut the trees,” he said, adding “many of us are struggling to survive. Work with us as a community and pass something that works.”
Another argued that a cannabis license increases a property’s value in Trinity County, and that all the building, septic and well permits required also generate general fund revenue, not including the general plan update fee.
“If it passes, we can imagine the legal growers exiting the licensing process, dropping the number from 300 to 30 which would be catastrophic. We already see too many empty restaurants because the legal cultivators are exiting,” said Bill Burton of Junction City.
John Brower of Junction City said taxes only serve to encourage the black market, predicting that Measure A would cost the average applicant $14,500 “before they grow. It’s a huge misstep that runs contrary to encouraging all these small businesses. Any other broke county would be offering incentives, not taxes that will shut down Main Street.”
Fenley responded there are no cannabis licenses issued for downtown Weaverville, adding “a few growers are devastated by this. Others say ‘fine’ and they look forward to it. They will know ahead what to plan for. They want a Sheriff’s deputy to arrive when they call. With 300 to 500 participants, it is putting a big burden on them, but hopefully they are doing really well and making a lot of money.”
One said he can’t wait to pay taxes on his licensed farming, but Measure A is too sudden, not allowing enough time to harvest a crop before having to pay.
Others argued about property values, debating whether cannabis activities are a boom or a bust to surrounding owners.
“It’s only valuable to pot farmers. I have acreage and no one will buy my place except a grower which would be a detriment to my other neighbors. There are 50 parcels and only one grows, but that one sneezed in the punchbowl and ruined it for everybody,” said one, adding the illegal mindset of the black market “is hard to get beyond, so pay the tax first. Every third entry in the police blotter these days is pot related, so what is the best way to ensure law enforcement gets what they need?”
Sheriff Tim Saxon responded that several recent calls involving burglary and other crimes at licensed grow sites have required massive responses from all law enforcement agencies, creating undue wear and tear on vehicles, fuel and additional costs “we have never had before, but code enforcement money derived from cannabis fees can’t be used” to cover those types of expenses.
Veronica Kelly-Albiez of Douglas City said she applauds people in the industry “doing everything they can to do it the right way, but it’s a bubble. Right now, we have permit fees that pay for the program, but we don’t see a tax to the general fund that supports all of the people and more busts of the illegal operations.”
County Administrative Officer Richard Kuhns said that if there were an increase to the general fund, it could be used to leverage other grants and funding sources “rather than just the ones we can afford now. The ones that do that use the money to help with economic development.”
On another note, win or lose, the future of Measure A is clouded by litigation that’s already pending against the county, challenging various technicalities in how the initiative was certified and placed on the ballot by the county elections office without a vote by the Board of Supervisors to do so.