Nevada County voters to decide cannabis business tax in November | TheUnion.com

Nevada County voters to decide cannabis business tax in November

Nevada County voters will decide in November whether businesses that grow marijuana will face a local tax.

The Board of Supervisors on Tuesday unanimously approved putting the question on the ballot. If approved by a simple majority, cannabis businesses would pay 2.5 percent of their gross receipts on a quarterly basis.

The tax is expected to raise between $1.3 million and $2.6 million a year.

"It should be funding the cost of enforcement," said Supervisor Ed Scofield, chairman of the board.

The tax would become effective on Jan. 1.

It's unknown if the new tax would affect those operating under a temporary commercial medicinal permit program, said Tina Vernon, the county's treasurer-tax collector.

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"This will be one of the administrative processes that will need to be worked out," she said in an email.

The county had issued one such permit as of Tuesday. All temporary permits expire June 30, 2019, said Craig Griesbach, the county's building director, in an email.

Permanent pot businesses can't exist yet in Nevada County. Supervisors must first past a new grow ordinance allowing commercial medical cannabis grows. Passage of that ordinance remains months away.

Business

County officials estimate between 175 and 350 businesses will seek permits in the first year of the new ordinance. They would pay the 2.5 percent rate for two-and-a-half years, during which time the method of taxation and its rate would remain unchanged.

Supervisors could then raise the tax rate to a maximum of 10 percent. They also could switch how cannabis businesses are taxed, changing it to either gross weight or square footage of grows.

Diana Gamzon, executive director of the Nevada County Cannabis Alliance, opposed a maximum fee of $8 per ounce under the gross weight method of taxation. She also pushed back against a proposed 25 percent penalty for those who fail to pay, followed by 1.5 percent interest per month.

"This is highly punitive tax structure," Gamzon said.

Supervisors opted to keep the $8 cap on the gross weight method. They changed the late penalty, dropping it to a 10 percent fee followed each month by another 10 percent, as well as the 1.5 percent interest rate.

"This is going to be a learning experience for everyone," Supervisor Dan Miller said.

Polling

San Mateo-based Godbe Research in May surveyed about 700 county residents about the possible tax. It found almost 69 percent of people polled support medicinal cannabis businesses. About 60 percent support a recreational pot business.

"There's always a drop between medical and recreational, but it's larger here," said Bryan Godbe, with Godbe Research.

Knowing nothing about the proposed tax, over 57 percent of those polled supported it. That left about 54 percent in support when factoring in the margin of error, Godbe said.

Support climbed to almost 61 percent after learning about the tax, or almost 58 percent with the margin of error, he added.

The tax needs 50 percent plus one vote to pass.

To contact Staff Writer Alan Riquelmy, email ariquelmy@theunion.com or call 530-477-4239.