Mendo Jumps Into Bed With The Pot Industry

Mendo’s Final Budget for 2017-2018 (July 2017-June 2018) assumes they’ll get something like $1.7 million in pot taxes and permit fees. According to the anonymous budget notes, “The new discretionary source [of revenue] is the result of the Cannabis Tax on cannabis cultivation and other related industries. During the Budget Workshop on May 15th, the Board directed that projected cannabis tax revenue be focused on funding cannabis enforcement efforts and support for roads. The Proposed Budget includes $1,000,000 for corrective maintenance programs on County roads and $708,349 for enforcement efforts.” …

“The additional funding for corrective [road] maintenance is made utilizing $1 million of cannabis tax revenue and $215,328 of Road Maintenance and Restoration Act (RMRA) funding, as established by SB 1. County staff is still somewhat unclear on the level of funding that will be received in FY 2017-18. The most conservative estimates indicate a total of $1,215,328 of ‘new’ funding will be available in the upcoming fiscal year. The Proposed Budget includes the possibility of a total of $2.5 million of ‘new’ funding being available, but that is a very optimistic amount.”

“…The FY 2017-18 Proposed Budget includes $352,000 for fleet vehicles. This is an increase over the past several years, largely due to the cannabis program. The Budget includes purchase of two additional vehicles for Planning and Building Services funded by cannabis dollars as well as a “reimbursement” of $120,000 for purchase of cannabis program vehicles in FY 2016-17. In addition to the PBS vehicles, the Budget includes replacement of a Farm Advisor vehicle, and replacement of several pool vehicles.

“…The Sheriff’s budget includes funding of $500,000 for purchase of vehicles. Previously the Sheriff’s Office has used asset forfeiture or other funds for purchase of vehicles and equipment. The Sheriff’s Office believes with the changes in cannabis regulation, their asset forfeiture and 11470.2 restitution funds will be significantly less and will require General Fund dollars for these purchases. The Budget includes utilizing $106,000 in the Sheriff’s Vehicle Replacement Reserve and $394,000 of General Fund dollars to purchase the vehicles.

“Cannabis Program The largest new program undertaken by the County in many years is the Cannabis Program. … When fully implemented, except for limited exceptions for qualifying patients and primary caregivers, the above cannabis related activities will be defined as ‘commercial cannabis activity’ and will require state licenses which will be issued beginning on or after January 1, 2018. State licensees operating in Mendocino County must first obtain a license or permit from the County. Mendocino County’s regulatory program for cultivation went into effect on May 4, 2017. The Proposed Budget includes revenue based on the projection the County will receive 600 permit applications in the fiscal year. This includes permit fees adjustment specific to the cannabis program in Agriculture, Planning and Building Services, and Environmental Health.”

(600 permits at $3000 per equals about $1.8 million.)

“…The Board has also directed increased enforcement efforts to be managed through the Code Enforcement Program in Planning and Building Services. Code Enforcement positions are not funded by permit fees and therefore discretionary dollars from the cannabis tax are used to cover the increased costs of this program, including the cost of a full-time Deputy County Counsel and a 0.5 FTE Legal Secretary in the County Counsel’s Office to support the Code Enforcement Program. Similarly a new position in Public Health and a contract for public outreach regarding cannabis education [sic] are funded from cannabis tax dollars. The chart below shows the use of cannabis tax dollars to support cannabis enforcement in the upcoming fiscal year.

THE CEO’S “Net County Cost” chart shows the $1.7 million of Cannabis Tax Revenue (but it’s in parens, which presumably means loss of revenue). This would seem to be the $1 million road allocation plus $700k for administration and enforcement. The CEO insists that the County will “Utilize a conservative approach to budgeting anticipated cannabis dollars, recognizing we are budgeting a new and unpredictable revenue stream.”

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THE POINT? Mendo has now committed to almost $2 million in pot tax and permit expenditures. People are hired, vehicles are bought, programs are in place, offices are expanded, all with dope money, all based on the presumption of at least 600 permit applications filed, paid for and approved.

HOW MUCH ENFORCEMENT of the rules will the County be inclined to do if enforcement jeopardizes this big new revenue stream?