PREVIOUSLY:

After some passionate public comments and a bit of spirited debate, the Humboldt County Board of Supervisors today voted 4-1 to lower the proposed tax rates for a marijuana excise tax measure slated for the November ballot. With Third District Supervisor Mark Lovelace assuming his not-uncommon position as the lone dissenter, the board majority opted to support a reduced tax rate proposal by Fifth District Supervisor Ryan Sundberg.

Under the now-approved proposal, growers would pay one dollar per square foot if their operations are strictly outdoor, three dollars per square foot if they’re growing indoors, and two dollars per square foot if they’re “mixed light,” meaning they combine techniques, often through nurseries, light deprivation and greenhouses.

After reviewing the results of local phone polling, county staff had recommended a progressive, tiered rate system that started at one dollar per square foot for small outdoor grows and increased with both size and grow type. So under this proposal a mixed light grow would have been taxed as low as $1.50 per square foot (if it was under 2,500 square feet) or as much as $4.50 per square foot if it was large-scale (up to 22,000 square feet). Outdoor grows would have had the highest rate, peaking at six dollars per square foot.

But at last week’s meeting, supervisors directed staff to lower those rates by 75 25 percent across the board, and today they lowered them even more.

During public comment, several growers urged the board to do just that, saying higher rates would dissuade their black market brethren and sistren from coming into compliance, especially with who knows what taxes being applied at the state level.

Nathan Johns, former owner of Hummingbird Healing Center, noted that a provision in the federal income tax code, section 280E, prohibits weed-related businesses from deducting the vast majority of their expenses from their incomes, as other businesses do.

Sequoyah Hudson, who identified herself as a founding member of the Humboldt Sun Growers Guild, said most growers support the idea of a tax, but they’re concerned about the rate.

However, several others, including Humboldt County Treasurer and Tax Collector John Bartholomew, encouraged the supervisors to hold tight with the proposed tax rate. “I would strongly urge you not to backpedal,” Bartholomew said.

The supervisors briefly discussed a suggestion to base the tax on yield rather than square footage. Chief Administrative Officer Amy Nilsen said the latter approach was chosen because of its simplicity and ease of processing, and that seemed to satisfy the board.

Second District Supervisor Estelle Fennell suggested moving forward with the rates proposed last week, but Sundberg stepped in. “I would like to talk about the numbers,” he said. “I think these are too high.”

County Counsel Jeffrey Blanck cautioned the board that once a measure is approved by voters, the county couldn’t increase the tax rates without going back to the public for another vote. Lowering the rates, however, is not a problem.

Undaunted, Sundberg moved forward with his 1, 2, 3 proposal. Lovelace pushed back, noting that this flat rate would not incentivize smaller grows; someone with a 1,000-square-foot garden would pay the same tax rate as someone with a 20,000-foot-garden, he said.

Sundberg noted that the rate may not increase but the sum still goes up as the grows get larger. “i think it’s a natural incentive,” he said.

First District Supervisor Rex Bohn came to his defense, noting that with an estimated 12,000 grows countywide, the county stands to make plenty of money if the owners come into compliance. Again Lovelace pushed back, saying a few million or even tens of millions of dollars in revenue represent just a drop in the bucket for a county with more than $200 million in unfunded CalPERS liability and $200 million in deferred road maintenance, among other needs. 

Initially reluctant, Fourth District Supervisor Virginia Bass warmed to Sundberg’s proposal, especially after the supes found out they could legally include a provision tying the tax rate to the consumer price index, as Lovelace suggested last week. That will allow the rate to go up over time without going back to voters with a new ballot measure.

Ultimately it was Fennell who made the motion to move forward with Sundberg’s rate proposal, and Sundberg quickly seconded. Lovelace made one last argument against the move, noting that other jurisdictions in the state are looking at charging $20 or $30 per square foot. “I was comfortable with the change we made last time,” he said, “but I’m not comfortable with this.”

Sundberg reiterated his arguments before summing things up nicely. “I think it’s a philosophy thing, is what it comes down to,” he said in reference to their divergent viewpoints.

Humboldt County voters will have their say on this proposal — yea or nay — come November.