Santa Barbara County’s tax on legal cannabis businesses has already raked in millions of dollars, leaving county officials to figure out just how to spend it.
A recent staff report stated that the county has received $3.1 million as of January 2019. That number represents more than half of the $5.5 million in cannabis tax revenue the county believes it will receive during the 2018-19 fiscal year, which runs from July 2018 to June 2019. Those projections, the report was quick to note, were speculative because of the newness of the tax and a lack of historical revenue data.
“There continues to be uncertainty about the amount of tax revenues,” County Assistant CEO Jeff Frapwell said at a Feb. 26 presentation to the Santa Barbara County Board of Supervisors. “That’s something we are going to remain conservative about.”
Voters approved the cannabis tax in June 2018. It taxes gross receipts for retailers and microbusinesses at 6 percent, cultivators at 4 percent, manufacturers at 3 percent, and nurseries and distributors at 1 percent.
A portion of the revenue goes to help the county enforce its cannabis regulations. According to Frapwell, an estimated $1.7 million of the projected $5.5 million of cannabis revenue will go to enforcement costs this fiscal year. He said he expects that amount to increase in the next fiscal year to about $2 million.
First District Supervisor Das Williams praised the work of the county’s cannabis enforcement team, noting that it had recently carried out several raids in Carpentaria and North Santa Barbara County.
“Our rules are meaningless unless we have adequate enforcement,” he said. “Strong enforcement and revenue, in the long run, are tied together.”
Tepusquet resident Renee O’Neill, who has long raised concerns about illegal and unlicensed cannabis operations in the area, agreed that using funding for enforcement was critical.
“I would strongly encourage … that we hire more enforcement staff,” she said.
Frapwell said county staff also recommended that cannabis tax revenue received in excess of the cost of enforcement be used for costs associated with one-time expenses for general governmental areas such as parks, roads, health care, and other needs. A list of one-time funding needs presented to the board in November 2018 included $50 million to replace the county’s pubic safety communication system, $4.5 million for solar power projects, and more than $438 million in deferred maintenance costs.
The board plans to discuss the cannabis tax issue further during budget hearings slated for April.
This article appears in Feb 28 – Mar 7, 2019.