Title
Adopt an ordinance amending Chapter 7.100 of the Monterey County Code to reduce the commercial cannabis business tax rates for mixed-light and indoor cultivation retroactive to July 1, 2022 and authorize the Board to, by Resolution, waive and/or stay interest and penalties for cannabis operators with delinquent cannabis business taxes.
Report
RECOMMENDATION:
Staff recommends that the Board of Supervisors:
Adopt an Ordinance amending Chapter 7.100 of the Monterey County Code to reduce the commercial cannabis business tax rates for mixed-light and indoor cultivation retroactive to July 1, 2022 and authorize the Board to, by Resolution, waive and/or stay interest and penalties for cannabis operators with delinquent cannabis business taxes.
SUMMARY/DISCUSSION
The County imposes an annual business tax on cannabis businesses under Monterey County Code (MCC) Chapter 7.100. That tax is collected by the Treasurer-Tax Collector. On June 1, 2022, the Cannabis Program (Program) reported to the Board of Supervisors on the implications of the decline in wholesale price points for commercial cultivation and the impacts of that decline on the cannabis industry and provided six options to consider.
The Board approved the following.
1. Effective July 1, 2022, reduce the mixed-light and indoor cultivation tax rates to $2 per square foot and $3 per square respectively.
a. This option would estimate FY 22-23 commercial cannabis business tax revenue at $7.8m, which would not have budgetary impacts from the perspective of how the Recommended Budget is built.
i. In a report to the Board on June 1, 2022, the Program reported the estimated commercial cannabis business tax revenue at $8.2m. At the time it was written, we did not have FY 22-23 Registration forms. Based on the FY 22-23 registration forms, we estimate cultivation and nursery square footage to be 2,965,568 square feet and 1,237,456 square feet respectively.
b. This option does not present operational challenges to...
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