Eureka – On Monday, February 7, 2022, the Humboldt County Board of Supervisors voted to reduce its county cannabis cultivation tax by 85% for 2022. The tax cut provides immediate financial relief to farmers, many of whom simply do not have cash reserves to be able to make their tax payments to the County while maintaining day-to-day operating expenses.
Known as “Measure S,” the cultivation tax was enacted by voters in November 2016 and imposed a $1, $2, and $3 tax per square foot of cultivation on legal cannabis farmers. Since 2017, Humboldt’s cannabis farmers have paid $48.5 million into the County’s general fund.
However, with the wholesale price of cannabis flower plummeting by 70% in the summer of 2021, the production cost of growing cannabis is greater than the sale price to the farmer. This market collapse effectively rendered farmers unable to pay their county tax bills, state licensing fees, and state cultivation taxes.
The victory was secured through a grassroots effort led by the Humboldt County Growers Alliance (HCGA), a trade association representing 275 licensed cannabis operators. The campaign to Suspend Measure S was launched in January with a website and a petition to the Board of Supervisors asking for complete forgiveness for two years of tax payments. More than 60 people gave public comment in support of the campaign to suspend Measure S, and more than 1,000 petition signatures were delivered.
On Tuesday, January 18, 2022, nearly 300 cannabis operators and their supporters gathered on the steps of the Humboldt County Courthouse for a press conference and rally. On Tuesday, February 1, 2022, the County’s Supervisors heard an agenda item about how to reduce the Measure S tax burden, and the public learned about the County’s budget and revenue projections. Supervisors directed staff to develop three possible solutions and to come back for a special meeting the following Monday.
During Monday’s special meeting, the Supervisors heard a resounding ask from the public:
A 100% suspension for Measure S taxes for one year
No late payment penalty for back taxes paid by September 15, 2022
To revisit a discussion on restructuring a fair, equitable, and market-responsive tax structure that incentivizes environmental stewardship
With the proclamation, “We (Humboldt County) put the green in the Emerald Triangle!” Supervisor Rex Bohn made a motion for a full 100% suspension of Measure S, which was seconded by Chair Bass. Deliberation ensued between the Supervisors and County staff to examine the impact on the County’s revenues versus the impact on Humboldt’s cannabis industry. Ultimately, three of the four Supervisors found an agreement to slash the tax burden on farmers by 85% for one year, with an additional reassessment of market conditions and the tax rate in the fall.
“People, we have to understand that we are suspending a tax that is applied only to cannabis growers,” said Supervisor Bohn. “They will continue to pay property taxes, state and federal income taxes, but the County needed to take a leadership role to help level the playing field to normalize cannabis as agriculture. By changing our tax policies, legal and productive operators have the opportunity to be here in the future. I hope that the State is taking note and will follow our lead to reduce state cannabis taxes.”
“Working together works! The industry stood united to secure significant tax relief for Humboldt’s farmers,” said Natalynne DeLapp, Executive Director for HCGA. “Our industry was not divided. People and families over revenue! We had each other’s back and knew where we could find compromises. We did not get exactly what we wanted, but we came darn close.”
"Yesterday's vote was a critical step towards normalization and equal treatment for cannabis agriculture. No other form of agriculture pays a special county tax simply for the right to operate. Measure S is a tax that only could have come out of prohibition, and yesterday Humboldt's supervisors sent a resounding message that cannabis farmers are just as much a part of our community as any other form of agriculture." said Ross Gordon, HCGA’s policy director.
"Today Humboldt County took another step in shedding old stigmas against cannabis farmers and leading the way towards the normalization of our businesses,” said Dylan Mattole of Mattole Valley Sungrown. “We're not there yet, but this was a move in the right direction."
"It was very clear which supervisors are in touch with the needs of the Humboldt Cannabis producers,” said Pat Andrews of Ice Box Flat Farms.
“I'm very grateful that the Humboldt County Board of Supervisors took a stand to support our cannabis farmers with their reduction in Measure S taxes,” said Linsey Jones of Aloha Humboldt. “The state of California should take note and realize that this kind of leadership and tax restructuring is needed immediately at all levels of cannabis taxation.”
“The Humboldt County Board of Supervisors and HCGA secured a crucial point of agreement that will resonate across the state and country,” said Selena Rowan, CEO of Midnight Gardens. “Humboldt cannabis farmers stand in solidarity with cannabis users and businesses across the nation and will no longer stand for these excessive tax burdens, which are a legacy of the unjust, irrational, and racist war on drugs. We are savvy and resourceful, and we are capable of running profitable businesses when taxes and regulations are in parity with other agricultural producers. Next, it’s the state’s turn to eliminate excessive state taxes and regulations that currently prevent BIPOC and legacy operators from entering the industry or sustaining profitable businesses.”