CA: Yolo County Readies New Medical Marijuana Tax For June Ballot

Photo Credit: Chad Hipolito

Yolo County supervisors voted Tuesday to put a proposed medical marijuana tax on the June 5 ballot, indicating support from board members who previously were at odds with the cannabis industry.

The proposal would put a 4 percent tax on the gross receipts of marijuana grown in the county and sold to manufacturers and dispensaries. That tax eventually would increase to five percent. A 5 percent tax also would be placed on cannabis products manufactured in the county.

Cultivation is the primary cannabis business in Yolo County, which has 68 permitted grows. The county only allows farmers to grow medical marijuana, and has not approved any dispensaries in the unincorporated area.

Some supervisors have expressed frustration with pot farms in the past, citing complaints from residents about security and the pungent smell from plants, particularly around harvest time. When the board last year directed county staff to start drafting a tax proposal, it included a poison pill that would end marijuana cultivation if the tax isn’t approved.

Board chair Oscar Villegas said the board has worked to create mutual understanding among its own members and the cannabis industry. “We’ve taken reasonable steps to find common ground,” he said. “This gets us to the starting point.”

The board voted 4-1 to place the tax measure on the ballot, with Supervisor Matt Rexroad in opposition. The board will have to take a second vote on the proposal next month before it is officially placed on the ballot.

Before voting against the proposal, Rexroad said he wanted a better idea of how the tax revenue would be spent.

The proposal before the board called for the money to be generally spent on “criminal enforcement of illegal cultivation, early childhood and youth education and development, substance abuse education and treatment for children and adults, rural infrastructure and programs and cannabis research, or any other expenditure per the Board’s discretion.”

Villegas and Supervisor Don Saylor said it makes sense to keep the spending plan flexible because of expected volatility in the cannabis industry and resulting tax revenues.

The county also collects fees from growers but that revenue cannot be used for eradication of illegal grows.

The tax proposal is part of the county’s broader approach to cannabis regulation. In addition to the proposed tax, the county is considering development agreements that would give some certainty to the medical marijuana operations that locate in Yolo County.

The county also is moving toward requiring all marijuana farmers to grow indoors or in greenhouses. The county’s agricultural commissioner has said that is the best way to address complaints about smell. The county also will consider land-use regulations that may place greater restrictions on where cannabis grows can be located.

Representatives of the Yolo Cannabis Coalition, which advocates for the local industry, said they support the county’s plan for a tax and regulation.