Cannabis Chamber of Commerce Critical of Planned Tax

Most people locally are familiar with the Garberville-Redway Area Chamber of Commerce, now known as the Southern Humboldt Chamber of Commerce.
The same cannot be said of another business organization that has emerged of late — the Humboldt County Cannabis Chamber of Commerce.
The outfit made a splash last week, or tried to, when it released a detailed press release blasting Humboldt County’s plan to place a cultivation tax on medical marijuana grows on the November ballot.
“As it’s written, this tax endangers the long-term health of an industry that comprises 60 percent of our local economy,” the release asserted.
“This is the first official statement the chamber has made [on a subject that] impacts the cannabis business community,” Allison Edrington, founding board president of the group, said in an interview last week.
Edrington is not based in SoHum, although she’s not terribly far away. She lives in Fortuna. The group’s two other officers are Dani Burkhart, who lives in Eureka, and Christina DeGiovanni, who lives near Arcata.
While its leadership may not hail from SoHum, some of the businesses in the 22-member organization are local — such as MC Processing, a “grower to patient processing collective,” as its website puts it, that’s based in Phillipsville.
“Our members are either involved in cannabis directly or are interested in servicing the cannabis industry,” Edrington explained.
In terms of individuals in Southern Humboldt who are members, Edrington mentioned Kevin Jodrey of Wonderland Nursery. And for what it’s worth, she said that Laura Lasseter, heard of the Southern Humboldt Chamber, has attended some of the group’s mixers.
Speaking of mixers, one was held in Redway in June that Edrington said attracted some 40 people. The next one is scheduled for Aug. 11 at Amillia’s, a restaurant in Garberville. The start time is 5:30 p.m.
As for the organization’s objections to the cultivation tax, Burkhart spoke out against the proposal at a recent Board of Supervisors meeting. According to an account in the Times-Standard, after complaining that it is nearly impossible for those in the cannabis industry to get a loan because of pot’s illegal status under federal law, Burkhart called the tax “premature.”
“If you start with a lower tax, you’re going to get more people participating in the system,” Burkhart was quoted as saying. “This tax kind of feels like cart before the horse. We can’t even bank, but you want to tax us?”
Among the objections cited in the press release is that the tax would hurt the little guy.
“The timing of this measure impacts small farmers much more deeply than large, factory style farms,” the press release says. “In the next 18 months, small and large farmers are burdened with the same fees, farm upgrades, and new operating expenses. Small cannabis farmers are currently less able to absorb these costs.”
Referring to the county’s proposal to tax marijuana grows on a square-foot basis, the release added: “Long-term fixed costs based solely on canopy space leave our cottage farmers with limited options: Scale up, sell out or stay black market.”
“If you have to pay taxes on the full amount permitted, it forces you to scale up,” was the way Edrington explained it in last week’s interview.
A tax based on the volume of production would be a better approach, she argued.  Among other things, she said it would comport with how non-cannabis agricultural producers are taxed.
“Other agricultural products are taxed by volume,” she said.
Sean Quincey, a senior administrative analyst with the county, explained that what the supervisors approved last month amounts to a flat tax based on an operation’s light source.
For outdoor grows, which can only harvest once a year, Quincey said the tax rate would be $1 per square foot. For mixed-light grows, which can harvest two to four times a year, the proposed tax rate is $2 per square foot. And for indoor grows with multiple harvest cycles per year, the rate is slated to be $3 per square foot.
Quincey said that scheme differs somewhat from “the tiered rate based on light source and grow size” that county staff originally put before the supervisors. Under that proposal, the tax rate would have ranged from $1 up to $6 per square foot of cultivation area. 
“The rates the staff was proposing still would have been the lowest in the state and the Board of Supervisors took it down further,” Quincey said — first, through a recommendation from 2nd District Supervisor Estelle Fennell to lower the tax rate by 25 cents per square feet, and then ultimately by the decision to go with a flat tax approach for the three types of grows.
Regarding Edrington’s call for a taxing system based on production, Quincey said such an approach doesn’t necessarily translate to a lower tax rate for growers.
“Mendocino [County] is going with a yield-based system and it works out to an amount double what we would charge depending on the light source,” Quincey related.
“The supervisors considered a yield-based system. The trouble with it is that there is more work involved from an administrative standpoint.”
“There was talk of having the [State] Board of Equalization act as a middle man of some sort” to help with the administration of such a system, which among other things calls for calculating and verifying production amounts. “But you need to pay to have them involved.”
Quincey said the square-foot approach jibes with the way the county handles permitting in general. “It lines up well with our permitting system,” he said.
While the impact of the Cannabis Chamber of Commerce’s opposition remains to be seen, it appears at this point that the group has an uphill battle ahead of it.
For one thing, the supervisors, who are scheduled to take a final vote on the tax rate proposal next Tuesday, seem unlikely to change their minds this late in the game.
For another, a recent poll showed high voter support — in the 70 to 75 percent range — for the tax initiative.