To: Board of Supervisors
Department or Agency Name(s): Auditor-Controller-Treasurer-Tax Collector, County Administrator’s Office, County Counsel
Staff Name and Phone Number: Brooke Koop, Christina Rivera, Kristin Horrell; (707) 565-2431
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Extension of Due Date for all Cannabis Business Taxes due January 31, 2022
End
Recommended Action:
Recommended action
Approve Resolution to extend the deadline for all cannabis business taxes due under the Cannabis Business Tax Ordinance from January 31, 2022 to April 30, 2022.
end
Executive Summary:
On January 4, 2022, the Board directed staff to bring forward an action that will provide additional time to review potential changes to the Cannabis Business Tax structure that applies to all persons engaged in commercial cannabis cultivation (“Operators”) in the unincorporated area of the County. The recommended resolution extends the reporting and remittance deadline for all cannabis business taxes due under the Cannabis Business Tax ordinance from January 31, 2022 to April 30, 2022. The resolution will only extend the January 31, 2022 cannabis business tax due date and does not affect the tax liability that is due in any way.
Discussion:
At the end of 2021, the Board asked staff to bring forward information to hold a discussion addressing the local cannabis operators’ assertion that the industry’s fiscal stability is at risk due to a significant reduction in the per pound cultivated cannabis product price. Additionally, cannabis industry advocates argue that state and local taxes are adding to the burden of the legal cannabis sector while also competing with illegal cannabis production.
The voter approved Cannabis Business Tax measure <https://library.municode.com/ca/sonoma_county/codes/code_of_ordinances?nodeId=CH35CABUTAOR_S35-5TAIM> provides that any change made to and allowed under the Cannabis Business Tax Ordinance, such as the lowering of the tax rate, must be done via an ordinance amendment. Given this limitation, and the need to further research and analyze the aforementioned issues, the Board directed staff to bring forward a solution that will delay all Operators’ Cannabis Business Tax payment.
Staff has developed a preliminary timeline with the goal of presenting implementable options for the Board’s consideration before the extended payment due date of April 30, 2022. At this time, assuming other workload priorities can be adjusted, staff estimates to return to the Board on March 15, 2022 with next steps options for the Board’s consideration.
Note, that the Governor’s January 10, 2022 State Budget Proposal includes the following language: “The Administration intends to further develop a grant program this spring that will aid local governments in, at a minimum, opening up legal retail access to consumers. Further, the Administration supports cannabis tax reform and plans to work with the Legislature to make modifications to California’s cannabis tax policy to help stabilize the market; better support California’s small licensed operators; and strengthen compliance with state law.” See printed page 223 of <https://www.ebudget.ca.gov/FullBudgetSummary.pdf>
Strategic Plan:
N/A
Prior Board Actions:
01-04-2022 Cannabis Tax Structure Board Discussion and Direction to Staff
Fiscal Summary
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FY 21-22 Adopted |
FY22-23 Projected |
FY 23-24 Projected |
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Narrative Explanation of Fiscal Impacts:
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Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
• Resolution Extending Cannabis Deadline for all taxes due January 31, 2022
• Memo to Cannabis Business Tax Operators regarding Extension of January 31, 2022 Tax Deadline
Related Items “On File” with the Clerk of the Board:
None