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Humboldt County slashes cannabis tax for struggling farms

Cannabis being grown indoors.
Erik Neumann
Cannabis being grown indoors.

The Humboldt County Board of Supervisors cut a cannabis excise tax by 85% on Monday after dozens of local farmers said they are struggling under poor market conditions.

Large farms around the state are crowding the market and cannabis prices crashed over the last year. There’s little margin for paying taxes when the costs of production and transportation in Humboldt’s remote areas are added in, according to growers.

The county’s cannabis excise tax, known as Measure S, took effect in 2017 when market conditions were better. But by 2021, after operation of large-scale farms in Southern and Central California gained momentum, wholesale prices had sunk from $1,200 per pound to less than $400 per pound, according to the county’s Department of Economic Development.

Measure S is based on grow area size, ranging from $1 per square foot for outdoor cannabis to $3 per foot for indoor operations. Melanie Johnson of Alpenglow Farms was one of the many farmers who told supervisors the financial hit could end Humboldt’s homestead farming tradition during the board’s public comment period on Monday.

“It’s just me and my family on our homestead,” Johnson said. “I respectfully ask that you vote to save family farms and that you leave no family behind.”

Local farmers want a two-year suspension of the tax. Wary of budget impacts, supervisors debated several options for a one-year suspension. Those included a 50% cut for taxes due in 2022 recommended by staff. Supervisor Rex Bohn supported a full suspension of this year’s payments but a board majority agreed on a compromise.

Supervisors ultimately voted 3-1 for the 85% cut on taxes due in 2022. The reduction will translate to about $10 million cut from the county’s general fund. The vote also includes deferring current Measure S payments due in May until Sept. 15. The board will decide what to do about 2023 tax payments this fall.

Supervisor Steve Madrone voted no, instead favoring a 50% tax reduction. The supervisor most likely to support the two-year suspension, Michelle Bushnell, recused herself from the vote because she owns a cannabis farm that was licensed by the state last month.