Santa Barbara County Cannabis Taxes Fall Short Again Due To Weed Glut | Government and politics
Santa Barbara County’s cannabis industry, like the rest of California, is experiencing the same growing pains as other states that previously legalized adult use — a sudden oversupply of product coupled with a shortage of retail outlets causing prices to fall.
The result is a drop in tax revenue which the county has used to help fill funding gaps for important services such as libraries and has raised hope for the future as this revenue stream has increased dramatically. from the fourth quarter of 2019-20 to the third quarter of 2020-21.
But then it topped out like the lead car on a roller coaster, and county officials now project culture tax revenue for the 2021-22 fiscal year will end up about $6 million lower than what was budgeted.
A second-quarter report to the board of supervisors showed that only $2.3 million in taxes were collected in the second quarter of this fiscal year. That’s more than the $2 million raised in the second quarter of 2019-20, but less than the $2.6 million in the same quarter of 2020-21.
Retail sales taxes on cannabis storefronts are also expected to be lower than budget by $567,000.
“This decrease is primarily due to when each of the six retail operators are expected to complete land use approval and business license processes,” said a state of the county budget report prepared by the county. County Executive Office Budget and Research Division.
“Staff currently expects one operator to complete county processes and begin operations in the fourth quarter of 2021-22, with the remaining five expected to open in the next fiscal year,” the report said.
In the meantime, the county will likely need to cover a budgeted transfer of $6.6 million to general county programs with $3.3 million of remaining unallocated cannabis revenue from fiscal year 2020-21&3. $3 million from the $4.7 million Cannabis Prudent Reserve Fund.
The oversupply problem in the wholesale cannabis market does not bode well for would-be growers who have submitted land use rights applications totaling $3,028.88 acres, nearly double of the $1,575 acre cap established by the Board of Supervisors for unincorporated land outside of the Carpinteria overlay. .
As of February 11, a total of 63 operators were on the eligibility list for area under the cap for unincorporated interior areas.
To date, the Department of Planning and Development has approved land use permits totaling 1,800.87 acres, but permits have actually only been issued for 586.92 acres.
Most of this difference is the result of appeals filed against approved projects, changes to projects caused by appeals, and projects simply withdrawn.
Planning and Development received a total of 75 calls for 48 projects. Of this total, 46 appeals were withdrawn, closed or otherwise dealt with.
Of 30 appeals currently being processed against 20 cannabis projects, 16 are before the Planning Commission and four will go before the Supervisory Board.
A total of 178 cannabis business license applications were submitted, of which 32 were issued. The rest is pending.
Meanwhile, illegal cannabis continues to thrive, which officials say is likely due to high state taxes, but the Santa Barbara County Sheriff’s Task Force is not relenting in its efforts to root out ” bad actors”.
During the first two quarters of the 2021-2022 fiscal year, 15 enforcement actions were taken, compared to 11 during the first two quarters of 2020-2021 and 20 during the first two quarters of 2019-2020.
So far this year, these enforcement activities have resulted in the seizure of 13,139 plants, valued at $6.5 million, as well as 3,518 pounds of dried produce, a worth $4.1 million.
If these operations had been legal, the county’s cannabis tax revenue might have been in better shape.