Following a comprehensive report regarding work on upcoming cannabis ordinances, four of five county supervisors say they have “no problem” with a proposed 2 to 6 percent tax on licensed commercial cannabis activity in Del Norte County, as suggested by its Cannabis Working Group.
However, legal counsel says when it comes time to vote on a final ordinance, a four-fifths vote of the board will be needed for it to pass.
Currently the county has a ban on commercial cannabis activity in the county but recreational use is legal for those over 21. The language of the ban states the board intends to repeal restrictions as ordinances are approved.
County Counsel Joel Campbell-Blair said he wanted to present details of the working group’s efforts to the board to see if it meets board expectations or needs further revision.
“These aren’t ordinances in front of the board right now, but they will be soon,” Campbell-Blair said Tuesday at the supervisor board meeting. “The tax ordinance has to go to the ballot in November. It has to be at a general election, so we kind of have a shot at this now and it will be a long time before we can do it again.”
Both the commercial and recreational ordinances need review by the county Planning Commission, which could take a month to six weeks, he said, noting any board changes need to be added before that.
Campbell-Blair explained the county has the authority to tax legal cannabis activity, which is any activity licensed by the state.
“So this is not going to be a tax on all cannabis activity, whether licensed or not, where we can go out and bust illegal grows for not paying their taxes like Al Capone,” he said. “Specifically, if they have a license from the state, we can tax it.”
Campbell-Blair further explained the county may tax lawful business in its jurisdiction.
“Right now, there is no lawful business. We have a ban in place but because this is a process that’s going to take until November, we anticipate the board repealing that ban and instituting something,” he said. “So, it doesn’t really matter what the board eventually chooses as a specific ordinance, this will tax, cultivation, retail and manufacturing.”
He said the tax structure will be in place even if the board does not lift the ban, but it will not be collected. The tax must be approved by a four-vote majority, he said.
If approved by the board, the tax vote will become a ballot measure and if the tax revenue is to be reserved for a specific purpose, the measure would require a 2/3 vote to pass. If the tax revenue is to be used for general government purposes, it will only need a simple majority vote to pass, he said.
Campbell-Blair explained specific uses, such as children’s programs or law enforcement, are easier to get public support. However, a simple majority for general use is a safer bet, he said, which is what counsel is choosing to do.
“Even though a good percentage of the people in Del Norte County voted to legalize marijuana, if they want to use marijuana, they might not want to tax themselves,” Campbell-Blair said, noting the board may change the tax revenue to support a specific purpose.
Campbell-Blair’s presentation explained the working group’s proposed tax in the unincorporated areas of the county would be 2 to 6 percent of gross receipts.
Medical sales would be exempt and county taxes would not apply inside Crescent City limits.
For the manufacturing sector, a 1 to 3 percent tax would apply, with $1 per square foot of outdoor cultivation and $3 per square foot of indoor cultivation.
“So the gross receipts number is not a sales tax,” he said. “It’s not in addition to the dollar amount you pay, it is part of it, so if you get charged $1 for cannabis, the retail would turn around and pay 2 to 6 percent of that dollar. It isn’t charging a dollar and throwing on 2 to 6 percent like a sales tax. It will include state taxes in that dollar amount so there is some compounding of taxes.”
Campbell-Blair said the county is limited in its ability to impose sales taxes. The working group felt a 6 percent maximum tax was reasonable in order to raise money while not discouraging the industry, he said.
Enforcement of ordinances could happen in such a way that if one is violating their permit, they are considered to be creating a public nuisance, thereby bring the tax collector and code enforcement onto the process.
“Failure to pay will result in a revocation of your license,” he said. “Since the state license requires local authorization, if we pull your local permit, you are going to lose your state permit, too, so there’s a pretty good incentive if you want to continue in business, to pay your taxes.”
Campbell-Blair said the personal cultivation ordinance is the reasonable regulations the board can impose on the legal growing of six plants per single primary residence.
“Keep in mind that right now, six plants is legal, with no regulation, except the two or three things the state requires,” Campbell-Blair said. “So, literally anything the board does will restrict what is currently legal.”
The working group proposes that square footage requirement must be met with a single space, not several smaller disconnected areas combined. Plants must be locked and not visible from a public place and equipment must comply with existing building codes.
Additionally, two residences on one property would not be considered a single family residence, in regard to outdoor growing, but may still comply with indoor growing requirements. Therefore no outdoor growing would be allowed on that property per state law, he said.
“That should allay some fears that you might get communal growing in an apartment complex or that renters in an accessory dwelling unit are going to have outdoor gardens,” he said. “It won’t be allowed.”
Following some discussion on proposed setback and plant height issues, Campbell-Blair noted if a grower is complying with all mandates, it should not create nuisance issues or complaints to code enforcement.
“If your neighbor smells a bunch of cannabis and is having a big problem with it, you’re probably violating some other rule,” he said. “and we can enforce that.”
To close the presentation, Campbell-Blair said the board could review the information from the working group and express any concerns or disapproval and/or give direction.
“If two of you aren’t on board with the tax ordinance, I know I won’t be getting the 4/5 (vote),” he said. “All of that is helpful to me.
Chair Chris Howard spoke of a constituent who reported a neighbor using a fan to blow cannabis growing smell out a window, into a community living area. Howard asked Campbell-Blair what the constituent can do, based on the proposed ordinances.
“First off, that sounds suspicious,” Campbell-Blair replied. “It’s probably not 100 square feet of growth space indoors. So, the first thing I think that’s probable cause for an inspection warrant, to go in there and see. If it’s really a small, appropriate grow, they are not going to need big fans to push it 200 feet away. Even if they are obeying every strict rule, they are still interfering with their neighbors’ quiet enjoyment of their property.”
Campbell-Blair said given the evidence, the neighbor should have no problem showing a nuisance in an administrative hearing.
Supervisor Gerry Hemmingsen asked how property owners can respond if an outdoor grow is drawing excessive water from area wells.
Campbell-Blair said such an issue is not yet addressed.
“It would be extremely difficult to prove why a well would go down or how much water they’re using,” he said, noting that language could be added to ordinances in the future.
Campbell-Blair said a grower using a vast amount of water would likely be violating several other ordinances which could be enforced by the county.
“I would hope that we’ve crafted an ordinance that gives us the tools and the rules to not have to do something so invasive and burdensome as insisting on meters on wells,” he said.
After some procedural questions, Supervisor Roger Gitlin reaffirmed his stance on the issue.
“I don’t support it,” he said of the 2 to 6 percent tax suggestion, “unless it’s a punitive tax to discourage all of the activity, so I think you know where I stand, I’ve made my points clear before so I can’t support this.”
Campbell-Blair used Gitlin’s comment to make a point.
“If any other one of you has a problem with this ordinance, it will fail, so we should know,” he told the board.
“I have no problem with it,” said Supervisor Bob Berkowitz. Howard and Supervisor Lori Cowan echoed the “I have no problem with it” sentiment. Hemmingsen nodded and motioned to that effect.
Regarding comments that discussions have yet to involve protections for children, Campbell-Blair said the working group consented that a growing plant poses no threat to children.
“We’re talking about people growing a garden,” he said. “People have to be decent, safe parents for other reasons and other laws. This doesn’t need to be setting the standard for parenting.”
Campbell-Blair said in reviewing other counties’ ordinances, he has seen no extra protections inserted for children.
Robert Derego, working group member and manager of Del Norte Patients Together, said state laws have several protections for children in place but studies are showing that kids are experimenting less with cannabis and other drugs.
Aaron Scorbeck said 528 days after voters approved Prop 64, the county still has no ordinances in place.
“The only thing the board of supervisors has given back to the voters is a ban,” he said. Scorbeck asked voters to vote in the June 6 supervisor election.
Eileen Cooper said lilies are grown locally and are a chemical-dependent crop, threatening local water quality.
“I would hope that cannabis would come forward and be a more benevolent crop, gentler on our salmon,” Cooper said. “Put in the buffers that we don’t have right now. Put in the incentives for green, unchemicalized growing.”
Campbell-Blair responded later by noting pesticide applicators in the lily bulb fields have to be licensed to do so.
“We’re talking about people’s gardens,” he said, “and stuff you can buy at Home Depot, stuff you can use on your tomatoes, is what’s available to them. There wasn’t really a reason to start restricting those things or telling people how to grow those things. We’re not talking about the dangerous stuff.”
Cooper mentioned a petition that has been filed with the Clerk/Recorder to place an initiative ballot on the November General election. “The voters want a backup plan. It is a worst-case scenario of nothing getting passed here by the board,” she said.
In regard to a question from resident Linda Sutter, Campbell-Blair said a retail ordinance is in the works before the working group and “shouldn’t be too far away.”
The board took no further action, giving the working group 4/5 consensus to continue moving forward in crafting ordinances.