Thanks to our colleagues at the Independent Coast Observer in Gualala, we were spared the annoying tedium of having to wade into Mendo’s “complicated” and stinky marijuana permit program discussion at last Tuesday's Supervisors meeting. ICO reporter Susan Wolbarst reported that the County is apparently owed approximately $6.8 million in unpaid marijuana taxes because “many people are just not participating in the system,” Acting County Treasurer/Tax collector Julie Forrester told the Board.
According to Ms. Wolbarst’s account, Mendo has issued 1100 to 1200 cannabis cultivation “permits,” which is a surprise to us because last we heard the number was in the 200s and the number of applicants was in the 1100 to 1200 range (and has been stuck in that range for years now. Forrester told the Supervisors that 551 of these “permit holders” did not pay taxes.
Left out of the ICO report was any mention of the enormous difficulties permit applicants have faced trying to get even provisional county permits. So it would be awkward, not to say surprising, to infer that applicants with applications pending may be reluctant to report sales and pay taxes if they don't have a provisional license because a cannabis program bureaucrat said they have not met all the application requirements and were thus selling without a permit.
It was also clear that Ms. Forrester has not been in contact with the County’s newly formed Cannabis Department because Ms. Forrester offered to provide a list of pot growers who are “delinquent” on their taxes to Cannabis Program Director Kristin Nevedal. Why this wasn’t done years ago remains an unanswered, if obvious, question.
Also complicating the pot permit tax question is the program’s ugly history where many permit applicants have given up on their applications and thus have either given up on cannabis cultivation and don't think they should pay even the minimum tax, or, desperate for any revenue, they are cultivating for what’s left of the black market and, obviously, won't be paying any taxes on that.
Surely, the County couldn’t be trying to collect taxes from someone who’s permit was withdrawn or abandoned — or could they?
As usual statements of the obvious were pronounced by County officials as if the program is workable, as if the pot market is not completely collapsed, as if such goofball statements from officials supposedly in charge of the program contribute anything to the discussion.
“There are people who are just not participating in the system,” said Tax Collector Forrester. “I think we need to work together to develop a procedure.” (That would be nice; after all it’s only been five years now.)
“I would support no tax at all on cannabis,” said Supervisor Ted Williams irrelevantly and non-sensically considering that his “austere” budget is highly dependent on those taxes, “but what I can't support is the payment of taxes is optional.”
Very bold.
Supervisor John Haschak agreed, saying, “You shouldn't be able to renew your permit if you don't pay taxes.” Golly, what a brilliant concept! Is Haschak saying that tax delinquents have received renewed permits already despite not paying taxes on actual pot sales?
Apparently (we have our doubts about this) former Supervisor and Godfather of the current failed system John McCowen suggested that the county try to tax the growers who are selling in the black market. “The board needs to expand the universe of people they’re collecting from,” McCowen was quoted as saying. “The tax needs to be made to apply to people who are illegal because they haven't applied for permits.”
Hmmm. Let's see if we understand this. Almost half the people who have applied for permits are not paying taxes, yet former supervisor McCowen thinks that the people who haven't even applied for a permit should somehow be taxed? We suspect there's more to this than the quote provided by Ms. Wolbarst. If Mr. McCowen has a workable proposal to tax outlaw growers, we’d love to hear it.
A number of permitted pot growers called in to say that they are not growing marijuana because of the drought, or the high taxes, or the poor economy, or the collapsed pot market, or the lack of a permit — and these were the ones who are probably acting in good faith. Permitted non-growers want to be exempt from taxes -- at present they are expected to pay thousands of dollars per gro in “minimum tax” whether they grow or not.
County Counsel Christian Curtis was “directed” to draft an ordinance on “fallowing,” (i.e., non-growing). And if you don’t think that an “ordinance” addressing not growing pot sounds beyond ironic in Mendocino County, you’re smoking too much of that weed you’re not growing.
Curtis is supposed to bring a draft of an ordinance about fallowing back to the board on May 3. It will be interesting to see how a “grower” will be required to prove they’re not growing when nearly half of the applicants are not paying taxes as it is.
Then there's the question of state permits. “The state has expressed concern with issuing or renewing provisional licenses to applications that are incomplete,” said Director Nevedal. She told the board that 102 of the 300 growers eligible for provisional licenses (now it’s 300? Oh wait, that’s “eligible”) had submitted the required corrections which she said were due on April 28th. If these numbers are not adding up to you, you are probably not the beleaguered Tax Collector.
Maybe things will become clearer in the future because “board members” requested a “detailed biweekly report” from Ms. Nevedal with numbers showing “the big picture including metrics” to measure progress. Historically, Mendo is allergic to “detailed biweekly reports” on anything, much less pot, and even more allergic to a report “with numbers showing the big picture including metrics.” But what the hell, might as well ask for it (again).
Not included in Ms. Wolbarst’s report was the following chart which was buried in the separate “preliminary budget report” presented earlier in the day showing that the county's anticipated pot tax revenues are way off, reflecting, albeit belatedly, the collapsed pot market and the failed pot permit program.
Note that the column labeled “FY 2021/22” for this fiscal year is itself labeled “projected,” and probably assumes tax payments that are not going to be realized. And next year’s “budget” revenue is a complete wild guess and has no business being labeled “budget.”
Nobody seems worried about whether or not the newly created Cannabis Department will cover its costs next year with grants and depleted tax revenues or, more likely, become yet another financial liability to the already precarious General Fund.
In fact, nobody seems worried about much of anything, blithely carrying on as if the pot permit program is not self-destructing before our eyes.
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