SLO Supervisors keep cannabis tax rate at 6%; some growers call for looser restrictions
KCBX News is issuing a correction. We broadcast and published a story about the cannabis tax rate in San Luis Obispo County rising by 2% on July 1 when, in fact, the Board of Supervisors voted in a special meeting on June 25 to keep the rate at 6%.
We deeply regret the error.
In 2018, San Luis Obispo County voters approved Measure B-18, which imposed a tax on gross receipts on cannabis business beginning at 4% and increasing annually to a maximum of 10%.
But at the June 25 board meeting, the supervisors voted to keep the tax rate at 6% ahead of July 1, when it was scheduled to increase to 8%.
In an interview with KCBX, District 3 Supervisor Dawn Ortiz-Legg explained her reasoning behind voting to not raise the tax.
“We know that the county's efforts to create an ordinance for cannabis that allows a path forward for projects, but also doesn't overdo it — that doesn't doesn't exceed the community's desires. I mean, we're trying to keep a balance here. So we want to support the industry, but we also want to be mindful of communities."
Ortiz-Legg said she recognizes that due to COVID-related delays, some of the applicants for cannabis businesses in SLO County are just getting started.
"And so it didn't seem to be the right way to welcome them into the industry to raise their taxes right away," Ortiz-Legg said. But she acknowledged that some communities are leery of the new industry. "So as the board, we're weighing these competing interests," she said.
Supervisor Debbie Arnold was the lone dissenter on the vote, arguing that the county should stick with the voter-approved Measure B-18 and raise the tax to 8%.
“This tax schedule was approved by the voters — over 76%, I believe —- that’s important to me that we would be overriding something that was not approved by us, but approved by the voters,” Arnold said at the June 25 meeting.
Supervisor Ortiz-Legg says she acknowledges the tax schedule was voter-approved, but there were things the voters didn’t know in 2018.
“I think that what the voters approved is all good, except that what the voters don't know — and what we didn't know in 2018 — is the fact that it was going to take hundreds of thousands of dollars for these applicants to get through the system," Ortiz-Legg said.
Ortiz-Legg said many applicants are currently stuck waiting for approval because of lawsuits, and she feels it doesn't make sense to raise the tax on the relatively small amount of approved businesses in SLO County.
"And so I think if voters understood the whole picture at this point, they would see why we kept it at 6%,” Ortiz-Legg said.
Some local growers would like to see the cannabis gross receipt tax even lower than 6%, as well as see some of the regulations around cannabis in SLO County loosened.
Austen Connella is the CEO of Slocal Roots Farms.
“As a farm here, we waited almost nine months after we had our land use approval, we had to wait for the sheriff to release his security requirements, and then we had to implement those security requirements before we were allowed to grow,” Connella said.
Connella says that cost his farm a year of cultivation, which in turn cost the county the lost tax revenue.
Neighboring Santa Barbara County has a 4% gross receipts tax on cannabis cultivation, which cannabis growers like Connella say San Luis Obispo County should follow.
The next SLO County Board of Supervisors meeting is scheduled for July 13. It’s unknown whether or not the board will take up the issue of cannabis tax at that meeting, as the agenda has not yet been released.