Sequoyah Hudson, Humboldt Sungrowers Guild

Hi- My name is Sequoyah Hudson. I am the owner of a small cannabis farm in Eastern Humboldt County- 8 Mile Family Farms. I also am the CEO of the Humboldt Sun Growers Guild - a Humboldt cannabis business that provides supply chain services to cannabis operators around the emerald triangle.

In early 2016 - before California had developed state policy for commercial medical cannabis - and before Prop 64, which consolidated medical and adult use regulations - I stood on these same steps with many of the same people here today - a collective voice, representing our county’s rural cannabis cultivators - we were here seeking support and a partnership with the people and leadership of Humboldt County introducing a proposal to develop a local permit process for land use and a pathway for commercial cannabis operators to operate legitimately here in Humboldt County.

We were also here supporting the development of a tax program for those who entered into the permit process to generate much needed revenue to support county services that would help improve the health and safety of our community.

We had hope and a vision - that by partnering with our community we could bring cannabis operations out of the shadows and be recognized as the vital contributor to our region’s economy not indirectly as it once was - but directly via a tax paid by the cultivators to be utilized for much needed county services.

Measure S was the result of the cannabis operators asking to be taxed.

That’s right - We ASKED to be taxed.

We wanted our industry and our community to flourish together.

It was the right thing to do and we knew it.

Measure S had flaws from the beginning. It was ba tax that you pay for the privilege to cultivate cannabis. If you experienced crop loss for any reason, if you had health or family problems that kept you from working, if your genetics failed to thrive – whether product made it to market or was even never sold - there was no reason to excuse you from paying the Measure S tax.

Humboldt's cannabis farmers are required to pay the Measure S tax regardless.

Measure S was put in place prior to State legalization and before additional taxation – when market prices for flower were four times greater than they are today.

The conditions that warranted this structure are not the reality of today’s legal market.

The Measure S tax proposal wasn’t perfect - but it was a place to start.

County leadership recognized this too. Precisely why language was included to give the Board of Supervisors the ability to adjust or restructure the tax should the time come that it was necessary.

I am here again today to ask for support from our partnership again.

The time has come and it is necessary to take a look at the Measure S cannabis tax and its structure and reassess its sustainability and accountability.

In early 2018 - prior to the pandemic and after the state regulatory framework for cannabis was launched - The California Growers Association released a report titled ‘An Emerging Crisis’- it predicted that there would be trouble in the California Cannabis Market due to oversupply, lack of market access and barriers to entry for small independent operators throughout the state.

Due to a series of policies over the past 6 years - we have been seeing in real time and living in real life- the unfolding of, what I hope is mostly ‘unintended consequences’ of what this report predicted -

The cannabis marketplace has indeed collapsed and our small rural farmers are suffocating.

At the Sun Growers Guild, like so many other small businesses in our community that support the local farmers, we are also struggling.

And the cannabis operators aren’t the only ones struggling - the entirety of our counties economy is suffering. Look around you, businesses closing, people losing their jobs and commercial real estate is left vacant and deteriorating - I am sure you have talked to your neighbors - Any small business owner will tell you - Grocery stores, equipment sales/repair shops, salons, auto dealers, small retail stores and non-profits are all seeing the impact of the collapsing economy.

We saw this happening before the Covid-19 pandemic and the pandemic has only exacerbated the problem. Most local businesses were able to get assistance through various Covid related assistance programs. While cannabis operations were deemed essential, we were unable to access these programs due to their source of funding being federal, where cannabis is still viewed as ‘illegal’.

While in California, and in Humboldt County, cannabis operations are legal - the costs of becoming a licensed and permitted operation are inflated and extreme.

On the expense side of things - We pay substantial permitting, regulatory and compliance costs. We pay inflated leases, insurance (that doesn’t even cover crop loss!!), banking and regulatory costs all while many are also experiencing severe crop losses due to fires and unexpected weather/pest related issues in addition to the impacts of the Covid-19 Pandemic.

In addition we have flat-rate taxes and fees to the local, state, and federal governments that do not change based on market conditions and are buried among the other piling costs.

Did you know – it is federally illegal for banks to give a cannabis business a loan?! And yet, cannabis operators pay state and federal income taxes greater than other businesses because the IRS prohibits writing off many of our expenses. Most have reinvested our profits back into our farms to ensure environmental compliance. As we’ve made these improvements on our properties we've also seen increased property taxes that are paid directly to Humboldt County.

Due to the lack of access to banking and capital - For most of us, being able to afford all these costs has taken nothing less than our life savings to build and maintain our businesses.

In addition to the inflated costs and lack of capital -On the revenue side of things - We have experienced multiple harvest cycles of record-low wholesale prices that have been declining and are currently at or below costs of production.

Prices have dipped to as low as $100/lb.

On average we are currently seeing $5-600 lb.

Even the best farmers who have been working on improving efficiency and reducing costs for sometime are experiencing the upside down economy.

It comes down to this one simple math equation and one basic principle; businesses fail when expenses exceed revenue.

Humboldt County's nearly 1,000 independent farmers, most of us families who successfully transitioned into California's legalized system, are in jeopardy of failing.

Our success, both short and long term is hanging in the balance.

While our community is amazingly innovative and resilient and has overcome many obstacles - This is just not sustainable. You have heard ‘Death by a thousand cuts’ - and I am afraid many are succumbing to the final cut.

I cannot state this enough: we would not be standing here today if this was not an absolute emergency. To keep our local and state authorizations to cultivate active and in good standing, Humboldt farmers will need to pay the county nearly $20 million in taxes by May 31st. Said simply and clearly – there is NO MONEY to begin the legal 2022 growing season much less pay the Measure S taxes still due from 2021. We need your help. Please tell our Board of Supervisors to suspend and repeal Measure S immediately and lets get to work on creating a more effective and accountable method for our cannabis operators to contribute to county services while at the same time receive much needed relief and implement a more sustainable tax model.