Fees for the process cannabis operations must go through to obtain a Santa Barbara County business license were introduced Tuesday, but the Board of Supervisors questioned the rates and wanted more information when they’re brought back for final approval.
The ordinance setting the fees developed by staff to recover the full costs of processing applications, issuing the licenses, verifying compliance with regulations and renewing licenses was approved as a first reading on a 3-1-1 vote, with 4th District Supervisor Peter Adam voting “no” and 2nd District Supervisor Janet Wolf abstaining.
Included in the motion was direction for staff to bring back the costs for processing land use and zoning permits through the Planning and Development Department, an indication of Fire Department costs and a report on the progress being made in securing a bank account to accept cannabis-related funds.
“All along I have opposed this scheme we’re cooking up here to regulate the industry,” Adam said, explaining his “no” vote. “It’s too complex, it’s too cumbersome. … This will just push them into the black market and we’re not going to get the revenue we expect.”
“Wet blanket,” responded 5th District Supervisor Steve Lavagnino, who made the motion to introduce the fee schedule that was seconded by 3rd District Supervisor Joan Hartmann.
“I’m torn on this,” said Wolf, who noted she could count on one hand the number of times she had abstained in a vote during her time on the board.
“Unfortunately I feel it’s not complete. We need to hear from Fire (Department), and P&D needs to be included,” she said, referring to the separate fees cannabis operators will have to pay to obtain land use permits from the Planning and Development Department.
“I’ve said before, we’re talking about pot, not pumpkins,” Wolf said in response to Adam’s comments. “If someone (with a cannabis operation) wants to go elsewhere, they’re free to go.”
Supervisors generally agreed with Wolf that the schedule of fees cannabis business owners will have to pay for obtaining land use permits should have been included with the charts used to figure how much it would cost in staff time to handle cannabis business licenses and set rates to recover those costs.
Dennis Bozanich, deputy county executive officer, said the business license process was divided into three areas — application, issuance and compliance, and renewal.
He said the staff estimated 150 license applications will be processed in the first year, which will require 16 separate activities by employees of the county executive officer, sheriff, public health, agriculture/weights and measures and treasurer-tax collector departments.
The full cost recovery rate for those staffers’ time range from $56 to $134 per hour, with 46.6 hours required to process a license application, 36.6 for license issuance and compliance checks and 52.45 hours for renewals.
That placed the total costs at $4,065 for processing a license application, $3,110 for issuing a license and checking compliance and $4,508 for a license renewal.
Because not all cannabis operations will have the same complexity, Bozanich said the most equitable way to handle the fees would be to require applicants to put down a deposit equal to 80 percent of the estimated cost.
Then they would only be charged for the actual hours spent on processing the applications, he said. If the total was less than the deposit, the difference would be refunded. If the charges exceeded the deposit, the applicants would be billed for the balance.
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“Why are the hourly rates so much less than Planning and Development (rates)?” Adam asked.
Bozanich said he didn’t have the Planning and Development rates with him, but Dianne Black, director of that department said the average hourly rate for the land use and zoning process is more than $200.
“It just seems like with these rates … somebody’s wrong somewhere,” Adam said. “We’re going to have to bring this back. There’s no way you can say the CEO’s staff should be getting half of what Planning and Development is charging.”
Lavagnino also wanted to know why the cost for a license renewal was higher than either of the other two.
Bozanich said the renewals would involve activities included in the application, issuance and compliance procedures, and if the costs for those were combined, renewals would “actually be discounted.”
“It’s important ot note, in order to apply for a business license, (cannabis operators) had to already complete the land use ordinance and zoning ordinance process,” Bozanich said.
Wolf said she thought the Planning and Development costs and fees should have been included in the license chart, and she questioned why the Fire Department’s costs weren’t included.
The only public comment came from Andy Caldwell, representing the Coalition of Labor, Agriculture and Business, who asked about applying the taxes supervisors are hoping to levy on cannabis businesses to the license costs.
“Why isn’t the tax sufficient to cover the costs,” Caldwell asked. “You’re adding a special tax no other industry is paying. … Is this the golden goose?”
He also questioned why the renewal fee wasn’t a fraction of the application fee and why the Fire and Planning and Development departments weren’t part of the schedule.
Bozanich said a lot of the actual costs may not be known until after the county has spent a year processing licenses.
“I think we’re really in the realm of speculation until we have a year under our belts,” he said. “I think these are our best estimates.
“The costs pale in comparison to what the state is charging,” he added, noting some of the state fees may run as high as $50,000 to $60,000.
Lavagnino said while some of the fees and regulations might seem like overkill, that might be needed at the outset of such a program.
“I don’t see anyone from the industry in here complainging about these fees,” he said.