To: GENERAL GOVERNMENT STANDING COMMITTEE
From: Board of Supervisors
Meeting Date: April 22, 2026
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Department Contact: |
Supervisor Haschak |
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707-463-4221 |
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Time Allocated for Item: 30 Minutes |
Agenda Title:
title
Discussion and Possible Action Including a Recommendation to the Board of Supervisors Regarding the Cannabis Business Tax
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Recommended Action/Motion:
recommendation
Provide a recommendation to the Board of Supervisors Regarding the Cannabis Business Tax.
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Previous Board/Board Committee Actions:
Ordinance No. 4361 adopted Chapter 6.32 - Cannabis Business Tax on August 2, 2016. March 2, 2022, the Board directed staff to prepare Amendments to the Cannabis Business Tax to create a procedure where cultivation sites could be fallowed with relief from the minimum tax requirements; this was brought back to the Board on May 17, 2022. April 19, 2022, the Board approved a motion to create a Fallowing Program and to reduce Cannabis Business Taxes, including the minimum business tax, by 50% for two years starting in Tax Year 2023. February 27, 2023, the General Government Committee recommended the Board take action to approve the Cannabis Business Tax reduction, a limited penalty and interest amnesty program, and create a tax payment plan. March 28, 2023, the Board adopted an Ordinance amending the Cannabis Business Tax to reduce Cannabis Business Taxes by 50% for calendar years 2023 and 2024. June 26, 2024, the General Government Committee made a recommendation to the Board that a reduction in the Cannabis Business Tax should be continued for a two-year period beginning in calendar year 2025, and ending December 31, 2026. On July 23, 2024 the Board directed County Counsel to draft an ordinance amendment extending the Cannabis Business Tax reduction for 2025 and 2026 in the amount of 40% and 35%, respectively; the implementing ordinance was adopted on September 24, 2024. On March 25, 2026, the General Government Committee began its current discussion on the Cannabis Business Tax. On April 7, the Board gave direction to staff to return with Ordinance Amendments requiring payment of Cannabis Business Taxes as a condition of maintaining a Cannabis Cultivation Business License (CCBL).
Summary of Request/Referral:
The Cannabis Business Tax was established through the will of the voters, with passage of Measure AI in 2017. An Advisory Measure (AJ) was also approved at that time, indicating that a majority of the revenue would fund enforcement of marijuana regulations, mental health services, county road repair, and fire & emergency medical services.
Based on Board action, the Cannabis Business Tax rate was initially reduced by 50% in 2023 and 2024. Later Board action then reduced the Cannabis Business Tax rate by 40% in 2025, and 35% through 2026. Additionally, the Board authorized a limited payment and interest amnesty program.
Despite these prior supportive actions, it is estimated that approximately $1 million in Cannabis Business Taxes, excluding penalties and interest, remain unpaid by current CCBL holders. The Board has given direction to staff that an Ordinance Amendment should be developed that will make it clear that cultivators must remain compliant with Cannabis Business Tax requirements in order to retain a CCBL.
Without action from the Board, the current 35% reduction in Cannabis Business Taxes will expire and 2027 taxes would be due at the rate approved by Measure AI and implemented through County Code. On March 10, 2026, by consensus the Board of Supervisors referred the Cannabis Business Tax to the General Government Committee.
$1 million in Cannabis Business Tax was budgeted for FY 24/25; actual collections that year were $1.474 million. $1.445 in Cannabis Business Tax was budgeted for FY 25/26; the actual amount to be collected cannot be projected at this time.
On March 25, the General Government Committee considered several potential Cannabis Business Tax rate recommendations to the Board, and asked staff to provide answers to four questions so the Committee could better understand potential implications of any recommendation:
1. What authority does the Board have to modify the Cannabis Business Tax without a ballot measure?
2. What percentage of Cannabis Business Taxes are paid through the “True-Up” process?
3. Can the budget impact be calculated if the True-Up (minimum is temporarily eliminated?
4. What is the best mechanism to confirm reported data?
Supplemental Information Available Online At: N/A
Fiscal Details:
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source of funding: Cannabis Business Tax |
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current f/y cost: With the existing 35% reduction in Cannabis Business Taxes, $1.445 million in revenue is budgeted in FY 2025/26. |
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budget clarification: No budgetary impact projected in FY 2025/26. |
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annual recurring cost: Under existing Board direction, Cannabis Business Taxes are being collected for FY 25/26 at an amount temporarily reduced by 35%. Without additional action by the Board, this temporary reduction will expire for taxes collected beginning in 2027. |
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budgeted in current f/y (if no, please describe): N/A |
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revenue agreement: N/A |
CEO Liaison: Executive Office
CEO Review: Choose an item.
CEO Comments:
FOR COB USE ONLY
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Executed By: Deputy Clerk |
Final Status: Item Status |
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Date: Date Executed |
Executed Item Type: item |
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