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Santa Barbara County's cannabis taxes on track to exceed last year’s by $3.3M
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Santa Barbara County's cannabis taxes on track to exceed last year’s by $3.3M

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Santa Barbara County’s cannabis tax revenues for the second quarter of fiscal year 2019-20, from Oct. 1 through Dec. 31, rose 13% over the same period last fiscal year, and if the trend continues, revenues for the entire fiscal year could exceed that of last fiscal year by $3.3 million, according to a report from the County Executive Office.

Enforcement actions conducted in the second quarter this year fell from the first quarter, but the combined total for both quarters is nearly the same as all the enforcement operations in the entire previous fiscal year, the report said.

The Board of Supervisors was scheduled to receive the report at last Tuesday’s hearing in Santa Maria, but it was pulled from the agenda along with a report on the process of selecting retail storefront cannabis business licenses to reduce public interaction during the COVID-19 pandemic.

Supervisors now are slated to receive the report at this Tuesday’s meeting in Santa Barbara as part of the administrative agenda, which consists of items usually approved together in a single vote without comment unless an item is pulled for discussion by a supervisor or member of the public.

According to the report prepared by Steven Yee, fiscal and policy analyst for the Executive Office, the total cannabis tax revenue for the entire 2018-19 fiscal year came to $6.7 million, while the total for just the first two quarters of this fiscal year have already hit $4.8 million.

If this trend continues in this year’s third and fourth quarters, cannabis taxes for the entire fiscal year could reach $10 million, based on figures included in the report.

The county received $2 million in cannabis taxes for the second quarter of the this fiscal year, up from the $1.8 million collected in the second quarter of last fiscal year but down from the $2.8 million pulled in during this year’s first quarter, the report said.

But this year’s second quarter taxes also came from more operators who reported gross receipts — 43 compared to 34 in the first quarter.

During the first quarter, 34 operators reported zero gross receipts and 22 did not file reports, while in the second quarter, 48 reported zero receipts and 15 did not file reports.

Yee said operators report zero gross receipts for a variety of reasons.

“Outdoor cultivation sites are often dormant during this quarter,” Yee said in the report. “Those operators who operate both nurseries and cultivation sites transfer their plants internally within the operation.

“They are required to report the activity, but it does not constitute a sale,” he said. “Thus, their nursery operations would report zero gross receipts.”

He added the treasurer and tax collector is taking enforcement actions against the operators who failed to file the proper reports.

During the 2018-19 fiscal year, the county conducted a total of 22 enforcement actions. In the first half of this fiscal year, 20 enforcement actions have been taken, the report said.

However, while a total of 474,171 illegally grown live plants valued at $96 million were seized in the 2018-19 fiscal year, the county has seized just 16,784 illegally grown plants valued at $4.22 million in the first half of the 2019-20 fiscal year.

Statistics for dried illegal products were not provided for last fiscal year, but for the first half of this fiscal year, 1,231 pounds of dried illegal products valued at $1.26 million have been seized.

Following the legalization of adult cannabis use, the state assured counties they would have access to the track-and-trace database to ensure compliance with cannabis regulations.

While cannabis operators are now required to use the system, local jurisdictions have not had access to the database, Yee reported.

But the county has now been invited to join Yolo and Monterey counties in a pilot program to allow access to that database, and staff is recommending the Board of Supervisors approve the agreement.

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County Reporter/Associate Editor

Lee Central Coast Newspapers associate editor Mike Hodgson covers Santa Barbara County government and events and issues in Santa Ynez Valley. Follow him on Twitter @MHodgsonSYVNews.

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