Tax Trim for Cannabis in Monterey

A significant tax cut was recently supported by a cannabis committee in the Monterey County. Last week Monday saw a committee gathering where a tax cut of between 50 and 75% was discussed, with Supervisors John Philips and Luis Alejo agreeing on the tax cut in order to give young start-up businesses an opportunity to flourish in the emerging market.

The marijuana industry had high financial expectations which the State is finding difficult to reach amid the high cost and expenses involved. Each county or city within the Golden State is given the right to adjust and amend certain regulations, including taxation. This tax cut is amid reports of the cannabis industry failing to reach significant targets and comes to offer support and aid to startups in the young industry, including cannabis dispensaries in Monterey and other businesses cannabis related in Monterey.

Due to the industry being new, there are many uncertainties and changes happening and Supervisor Alejo admitted that if the taxes are kept at such a high rate, then investors will also be discouraged from investing in the industry and cannabis dispensaries in Monterey. He also said that the ultimate goal is for the industry of cannabis in Monterey to be successful, generating a sustainable income for the county.

The majority of the committee agreed that the tax for local county businesses such as weed dispensaries in Monterey and delivery services should be lowered while the committee was indecisive on whether or not to set the tax at 10% for those involved in the cultivation of cannabis in Monterey. The 10% tax is down by a third from the original 15%, however, both Philips and Alejo disagreed that it should be set at 10%. However, both supervisors did not agree on the rate it should be set.

A proposal for the cannabis industry that proposed the tax to be put at 4% per foot squared was backed by Alejo. The proposal for this tax was based on the estimation that the industry of cannabis in Monterey could grow to more than double its current growing size. Cannabis cultivation covers roughly 8 50,000 square feet while it is estimated that, if the taxes are lowered to the rate of 4% per foot squared, then that number of square feet could expand to nearly 2 million by the end of this year alone.

Some prominent leaders in the agreed that should the $2 million number failed to be reached, then the tax could be increased to and a half.

Supervisor Alejo admitted that the tax agreed upon should be met with fluidity, as the rate could be amended depending on the future outcomes of the ever-changing and growing industry. While Alejo was ready to amend to the 4% rate for cannabis cultivators, Philips did not agree and was suggested that the rate should be around 7-8 percent. His argument was that the rate would not be as easy to increase as it would be to decrease, should the need for further adjustment arise.

Another matter of importance was the illegal cannabis market in Monterey. Legitimate business owners were expressing the need for help as the black market was threatening the success for the more legal, yet more expensive businesses. Philips suggested that a task is set out for two weeks, in an effort to root out greenhouses and other outdoor cultivations that are not in compliance with regulations and licensing.

In an effort to resolve the tax disagreement and discuss the enforcement regarding cannabis in Monterey, a further meeting will take place on the 25th of May. Philips said that in order for the tax rate to be lowered beyond 6% there needs to be an effective task force in order to root out the illegal growing operations.

In conclusion, the meeting set that the tax for the retail businesses will be dropped to 4% and to lower the tax rate for manufacturing operations to just 2.5%. Furthermore, the tax rate for distributional operations will be lowered to 2%. Many other issues were addressed and agreed upon, including altering the definition of the term cannabis “canopy” in an effort to define it as a living, active and growing plant. The fine for being late with paying taxes due was also reduced.

There was a large number of cannabis industry workers and entrepreneurs who argued for the tax cuts, bringing to light the idea that if there are high tax rates it could significantly damage the fledgling cannabis industry in Monterey.