Rio Dell City Council wants state cannabis cultivation taxes reduced or eliminated

At a special meeting of the Rio Dell City Council on Tuesday, December 14th the Council approved a resolution urging the State government to consider reforming its cannabis taxation system. Specifically, the Council requested that State dramatically reduce or eliminate State cultivation taxes. 

The State’s original tax scheme called for cultivation rates ranging from $9.25 to $2.75 per ounce, depending on the type of dried product. This is in addition to a 15% State transaction tax at the retail level.

Starting on January 1, 2022 the State plans to raise their cultivation taxes to range from $10.08 to $3.00 per ounce despite a deep decline in legal cannabis prices.

“This is a case where what is going up should be going down, and what’s going down needs to be going back up.” States Rio Dell Mayor Debra Garnes. “It’s upside down. The State needs to correct this. The State needs to respond. They are by far taking the lion’s share of cannabis tax receipts and they risk killing the concept of the small legal cannabis farmer. That’s not good for anyone in Humboldt.”

The Council’s Resolution resulted from the request of Margro Advisors, a cannabis consulting firm that has invested in the City.

California voters passed cannabis legalization via Proposition 64 on November 8, 2016. Over the subsequent years, the City of Rio Dell worked hard to develop a comprehensive framework to allow the newly legal industry to invest in the community, including cultivation.

“I think locally we’ve done a good job of turning this newly legal industry into something that benefits Rio Dell as a whole.” Stated Rio Dell City Manager Kyle Knopp. “We’ve been able to pave roads and invest in public safety, in good part because of cannabis legalization and how we’ve approached it. But the State’s taxation system is now putting these local benefits at risk, perpetuating the black market and shutting down legal north coast cultivators.” Knopp concluded by underlining the disconnect between the January 1st cultivation tax increase and the State’s current record $30+ billion surplus.