Change to Nevada City’s tax code forgives fees on destroyed marijuana grows
December 20, 2017
Nevada City added a provision to its cannabis tax structure that forgives fees for lost crops, a move cannabis advocates say sets an important precedent as the state moves into legalization next year.
The Nevada County Cannabis Alliance requested in October the city make the slight — though, for some, potentially critical — change to its initial proposed tax structure, which would have charged marijuana cultivators based on the size of their grows regardless of whether plants were destroyed before they were harvested.
Nevada City so far is the first jurisdiction in Nevada County to allow commercial medical cannabis cultivation under the state's new regulations. Though it's unlikely many cultivation businesses will operate in the city, which is just under 2.2 square miles in size, the Alliance said the city's new, amended tax structure sets a good example.
"The city is taking into consideration the environmental risks that are a reality for those cultivating this plant," said Diana Gamzon, executive director of the Nevada County Cannabis Alliance.
In October, wildfires tore through large portions of California's Wine Country, reportedly destroying numerous cannabis farms in addition to taking dozens of lives and destroying thousands of structures, among other damages. Gamzon said the horrific disaster was a perfect example of the need for jurisdictions to account for the possibility of crop loss when creating tax structures.
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"Nobody could have predicted those fires," she said.
Jonathan Collier, a member of the Alliance's executive committee, said he plans to advocate for Nevada County to adopt a similar provision.
"This will be a big, big issue for us with the county," Collier told The Union last month. He estimates hundreds — if not thousands — of growers will apply for business licenses in unincorporated parts of the county when legalization takes effect next year.
The city proposes charging growers $4 annually per square foot of canopy space in a facility that uses artificial light, $3 annually for mixed light and $1 for natural light.
"In the event a crop of a commercial cannabis cultivator is destroyed after being planted but before being harvested, the tax administrator may make a refund of the tax paid (or abate the tax not yet paid) with respect to the square footage of the destroyed crop," the amendment to the city's tax code states.
Nevada City's proposed cannabis taxes will need voter approval at an election scheduled for June 5, 2018 before taking effect.
The city currently does not charge cannabis businesses any additional taxes, but customers at those businesses are subject to the city's standard 8.75 percent sales tax — unless they have a state-issued medical marijuana identification card, which exempts patients from sales tax.
The state also charges a 15 percent excise tax on purchasers of cannabis, and charges growers $9.25 per ounce of cannabis flowers that enter the commercial market and $2.75 per ounce of leaves.
"What's proposed in Nevada City is fair and reasonable," Gamzon said. "It allows for a pathway for cannabis businesses to succeed without being overburdened by taxes. And it allows the city to collect its fair share."
To contact Staff Writer Matthew Pera, email firstname.lastname@example.org or call 530-477-4231.