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HumCo Ponders Pot Tax Evasion Loophole

Humboldt County has set its state and federal lobbying priorities for the coming year and one of the top-ranking items identifies a significant obstacle to collecting marijuana grow taxes.

The county’s Board of Supervisors considered its state and federal legislative platform at its Dec. 6 meeting. The platform sets lobbying priorities to be advanced by the county’s legislative consulting firm.

Among the top state priorities are establishing local control of marijuana regulation as well as local control of marijuana taxation.

In November’s election, voters approved an excise tax for marijuana cultivation but the legislative platform states that “the transient nature of commercial cannabis cultivators presents significant challenges regarding approval and collection of such taxes.”

As described in the platform document, the problem is that cultivators could lease land, grow a crop on it and then leave the property, “Making it extremely difficult, if not impossible, for counties to collect taxes.”

The proposed legislative solution is to allow counties to collect grow taxes as part of property tax bills. But in response to a question from Supervisor Ryan Sundberg, County Counsel Jeffrey Blanck discussed the dilemma of taxing unpermitted growers.

He said state regulations stemming from voter approval of recreational marijuana may define unpermitted grows as being beyond taxation because they’re illegal. “We’re closely watching that to see when and whom we can send a bill to,” Blanck continued.

Blanck said he’s analyzing the issue and he described it as “a statewide issue” that all counties seeking to tax marijuana face.

Another section of the state legislative platform deals with regulating marijuana, describing it as a “particularly vexing and unusual land use.”

The platform seeks to allow counties to “enact prohibitions or general regulations in the face of threats to public health, safety and general welfare” posed by cultivation and dispensaries.

Also included is support for limiting grow sizes, as the platform describes the state’s allowance of grows of over an acre as a provision that “threatens our environment and local economy.”

On the federal side, the platform notes that the feds classify marijuana as a schedule one drug, which is defined as one that’s harmful and has no medical benefits. According to the platform, regulation of herbicide use and food safety and allowing marijuana-related banking can be done without forcing re-scheduling.

Providing the only public comment on the platform, Blue Lake resident Kent Sawatsky derisively referred to marijuana as “Humboldt County green crack” but supported rescheduling it as a means of advancing regulation and protecting the county from federal intervention.

“It’s imperative that this happens because the position you folks are in and the state of California is in due to a change of politics is what you would call an untenable position,” he said.

Supervisor Estelle Fennell asked if the section stating that the county believes regulatory issues can be addressed without rescheduling should be changed or added to.

Board Chair Mark Lovelace said the language was chosen because it’s unlikely that the federal classification of marijuana will be changed soon. “But there might be agreement that we should tax and we should regulate,” he continued.

Fennell suggested adding language indicating the county’s support for rescheduling.

Supervisors directed staff to make modifications to the platform and have it return for approval on the consent agenda of next week’s meeting.

Other priorities for federal-level lobbying include limiting corporate and union contributions in elections, stopping “wrongful postal closures,” reauthorization of several pools of federal funding and supporting Klamath River Basin restoration.

Other state-level priorities include allowing standard-sized trucks through Richardson Grove, allowing counties to implement their own versions of a state program that streamlines permitting for affordable housing and reducing voter approval thresholds for local ballot measures.

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