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Cannabis Taxation Discussion

San Luis Obispo Auditor-Controller Jim Erb had as many questions for attendees as he had answers during his open house discussion on a cannabis taxation ordinance he plans to present to the Board of Supervisors Jan. 9.
“You guys know this stuff better than we do; we would love to sit down with you and hear your thoughts on this,” Erb told the sparsely attended meeting in the board chamber Nov. 30.
Sitting on the dais with members of his staff, Erb outlined options he thinks the board needs to consider when contemplating a tax on production, manufacture, transportation and retail sales of marijuana. He encouraged citizens to speak freely with their insights on the fledgling industry.
Citing low estimates from consultants, Erb said the county could see $2-5 million a year in taxes from the cannabis sector. The tax ordinance he will propose early next year would not designate how the money should be spent. The money would be added to the county general fund and used as directed by the Board of Supervisors.
“We anticipate indirect consequences from this industry that could have impacts on social services, mental health, drug and alcohol services. Humboldt County has been dealing with it for a long time and it has ruined their county. Their county has a huge mental health budget,” Erb said.
Assistant Auditor Jim Hamilton said they are approaching the subject with as much flexibility and sensitivity to how the industry operates as possible, down to the timing and method of collection.
The cannabis industry has had trouble establishing banking practices due to previous legal restrictions and the stigma attached to the cultivation and sale of marijuana. Erb said he understands that may change over time, but in the meantime the county would have to find ways to accommodate the cash-intensive businesses.
“What is ironic is we have worked for years to get away from cash,” Erb said. “This industry has thrown us into how to handle cash again. If the banking situation changes and we can accept online payment, we will jump at the opportunity to get away from cash.”
At least one attendee suggested they be allowed to pay weekly because of the large amounts of cash involved. The auditor’s office is looking into the purchase of a high-speed cash counting machine to help the process.
The county taxation discussion is timely, as several cities are considering how they may handle cannabis establishments within their city limits. Just this week the Grover Beach City Council introduced an ordinance regulating commercial medical cannabis businesses within the city. On Nov. 27, the Board of Supervisors adopted new regulations and restrictions on cannabis activities within county jurisdictions.

By Justin Stoner

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