Sonoma, California is easing the tax burden for weed farmers in the county

Officials in Sonoma, California, moved this week to grant tax breaks to the area’s cannabis growers, another decision driven by the ongoing economic struggles of the state’s legal marijuana industry.

The North Bay Business Journal reports that the Sonoma County board of directors “voted 4-1 on Tuesday to change the cannabis cultivation tax, reducing the amount some growers pay while raising it for others.” whereby “Cannabis growers in the county’s jurisdiction are taxed based on the size of their operations, which are classified in three different methods, calculated at a gross income tax rate of 2.5%.”

The change will go into effect in July, according to the Journal, which noted that cannabis growers “will pay [a] rate of $0.75 per square foot for outdoor deployments; $12.50 per square foot for indoor grows and $3 per square foot for mixed light grows, which use a combination of artificial and natural light.”

This week’s vote comes nearly a year after the Sonoma County Board of Supervisors cut cannabis cultivation taxes by nearly 50%.

Sonoma County Board of Supervisors James Gore told the High Times last March why he supports the new tax balance.

“This tax cut is consistent with the market impact cannabis producers are currently facing with a precipitous drop in the wholesale price per pound,” Gore said at the time. “The reason this was justified, deserved and justified is that our cannabis tax, like many other jurisdictions, was based on area – square feet. It should be 1.5 and 5 percent of gross receipts, but when the wholesale price goes down and you’re still taxing based on square footage, that potential 3 to 5 percent suddenly grows to not just 15 or more 20 — but above that.”

Gore explained that the previous “tax policy didn’t fit the scenario that was going on.”

“In the end the vote was 5-0, but there was a lot of argument in the discussion. There were some who didn’t want to take the tax back,” Gore said. “In the meantime, we will move to a gross-income model. So it’s going to be a while before we decide how to do this effectively. So that means, as it should, it oscillates up and down with market conditions. That is the ultimate goal.”

“We’ve put people out of business with our policies, so this is the right thing to do,” he continued. “The reduced cultivation tax rates are necessary to reflect changes in the marketplace and the policy direction of our board. The excess revenue in our cannabis program will support operating costs for two years while we transition to a new tax model and policy framework. We are committed to fixing this issue for Sonoma County, and that means continuing to work with neighborhoods and industry leaders, learn from other counties, and find local solutions that are fair and safe for both communities and the environment are sustainable.”

This week’s board vote was in the same vein, with the North Bay Journal reporting that the move “came after months of intense pressure from cannabis industry officials who have complained that layers of local and state tax corporations are moving into the legalized market.” California’s have hampered.”

The legal cannabis industry across the country has been through tough times, as customers increasingly turn to the illegal market for cheaper prices, while growers and operators who participate in government-sanctioned programs are often hit with onerous taxes and regulations.

A survey by the National Cannabis Industry Association last year found that only 37% of the nation’s cannabis operators are profitable. In California it was only 26%.