Nearly four months after recreational marijuana sales became legal in California, voters in unincorporated San Benito County will vote June 5 whether to adopt Measure C, an ordinance to tax cannabis producers.
Before the voters have the opportunity to test the merits of taxing the expansion of the cannabis industry into rural San Benito County, a burgeoning industry already ramping up in Hollister.
In the fertile soils of San Benito County, cannabis could be a gold mine for local governments.
Measure C will impose a tax on cannabis business in the county based on square footage of the operation, or, gross receipts. The rates will range from $3 – $17 per square feet for cannabis cultivators. Gross sales for distributors will range from .5 to 4 percent, for manufacturers 2.5 to 4 percent, for retailers .5 to 8 percent, and 2.5 to 5 percent on microbusinesses, a special license that allows for every aspect of cannabis operation.
The passage of Measure C will not legalize recreational cannabis sales, cultivation, and manufacturing in the county. Should the measure pass, the county will have a tax structure in place before supervisors decide whether to approve sales or cultivation of recreational cannabis in rural San Benito County.
As of today, there are no medical or recreational cannabis retail or cultivation operations allowed in unincorporated San Benito County.
San Benito County Sheriff’s Department Sheriff Darren Thompson was asked by the county to estimate how much tax revenue could be generated and his department estimated that $3.3 million to $3.8 million from 25 to 30 acres of cannabis crops was possible, based on the lowest tax rate.
The estimate was based on the previous cannabis grows that occurred in the county before a moratorium put an end to what was largely informal, ungovernable, or illegal production.
“We are more interested in the manner in which the marijuana industry will operate, then in the manner in which they are taxed,” Sheriff Thompson said. “The 25-30 acre estimate is a prediction of potential grows sites, based on the amount of interest shown by the industry to date. It’s not a scientific estimate, as there is no factual way to determine who or how many will ultimately choose to pursue that business in San Benito.”
Measure C proponent Victor Gomez, a former mayor, believes the county’s estimate is low, and that the tax per square foot for cultivators will be close to $7 per square foot.
“If you can get $22,000 per acre or about $160,000 per we could bring in between $5 and up to $20 million a year,” Gomez said.
Opponents of Measure C are not confident that the tax revenue will outweigh the adverse effects of expanding the cannabis industry in San Benito County.
“That is an extremely difficult question and really part of the problem with not having a clear and defined regulatory structure in place which spells out what exactly the ordinance will allow and how they will be required to operate,” No on Measure C leader Steve Becerra said.
In the City Hollister, several cannabis producers are licensed, and are required to pay an assortment of fees and taxes. Owners pay a $7,482 application fee, a $1,498 cannabis conditional use permit, $1,498 for a site and architectural review, a yearly $5,992 permit renewal fee, and 5 percent each of sales for manufacturing, testing, distribution and dispensing. None of the fees or taxes was voted on by the voters of Hollister.