To: BOARD OF SUPERVISORS
From: General Government Committee
Meeting Date: May 5, 2026
|
Department Contact: |
Supervisor Mulheren |
Phone: |
707-463-4221 |
|
Department Contact: |
Supervisor Haschak |
Phone: |
707-463-4221 |
|
Item Type: Regular Agenda |
|
Time Allocated for Item: 30 Minutes |
Agenda Title:
title
Discussion and Possible Action Regarding Recommendation from the General Government Committee to Direct Staff to Develop an Ordinance to Eliminate the Minimum Cannabis Business Tax, Effective Tax Year 2027, Further Allowing the Expiration of Temporary Cannabis Business Tax Decreases Which Began in 2023, with Future Cannabis Business Taxes Due at 2.5% of Sales as Per County Code
(Sponsor: General Government Committee)
End
Recommended Action/Motion:
recommendation
Provide direction to staff to develop ordinance amendments as necessary to eliminate the minimum cannabis business tax, effective tax year 2027, further allowing the expiration of temporary cannabis business tax decreases which began in 2023, with future cannabis business taxes due at 2.5% of sales as per county code.
End
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 (GGC) 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 GGC 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 GGC 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). On April 22, the GGC made a recommendation back to the full Board.
Summary of Request:
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. On April 7, the Board gave direction to staff that ordinance amendments 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. The General Government Committee discussed this referral on March 25 and again on April 22. In response to questions posed, the Tax Collector’s Office provided a memo (attached) with additional information. The Committee’s recommendation to the Board is that the Minimum Cannabis Business Tax, historically paid through a “True-Up” billing should be eliminated. Additionally, the Committee recommends no further extensions of temporary tax reductions that began in 2023, which will have Cannabis Business Taxes collected at a rate of 2.5% based on sales per County Code.
Alternative Action/Motion:
Provide direction to staff.
Strategic Plan Priority Designation: An Effective County Government
Supervisorial District: All
Vote Requirement: Majority
Supplemental Information Available Online At: N/A
Fiscal Details:
|
source of funding: Cannabis Business Tax |
|
current f/y cost: With the existing 35% reduction in Cannabis Business Taxes, $1.445 million in revenue is budgeted in FY 2025/26. |
|
budget clarification: No budgetary impact projected in FY 2025/26 |
|
annual recurring cost: The annual recurring cost of this approach cannot be accurately estimated. There may be increased revenue due to the expiration of a current 35% reduction in the tax rate. However, the TTC has determined that in Tax Years 2023 and 2024, roughly 65% of Cannabis Business Taxes were collected through the True-Up process. |
|
budgeted in current f/y (if no, please describe): N/A |
|
revenue agreement: N/A |
AGREEMENT/RESOLUTION/ORDINANCE APPROVED BY COUNTY COUNSEL: N/A
CEO Liaison: Executive Office
CEO Review: Yes
CEO Comments:
FOR COB USE ONLY
|
Executed By: Atlas Pearson, Senior Deputy Clerk |
Final Status: Approved |
|
Date: May 5, 2026 |
|
|
|
|
|
|
|