County Projects $6 Million Cannabis Revenue Shortfall for 2021-22

County Projects $6 Million Cannabis Revenue Shortfall for 2021-22 title=
County Projects $6 Million Cannabis Revenue Shortfall for 2021-22
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By Melinda Burns

Because of a glut of marijuana on the market, the county’s tax revenue from cannabis cultivation is projected to be only $12.4 million this fiscal year, or $6 million less than the $18.4 million that was forecast last June when the county budget was adopted, the County Executive Officer said this week.

During the 2020-21 fiscal year ending last June, the county collected $15.7 million in taxes from cannabis cultivation. The projected decrease for 2021-22 “is attributable to the oversupply of wholesale cannabis product and resulting price compression that continues to persist locally and statewide, much as it did early on in other states that legalized adult-use cannabis prior to California, such as Colorado and Oregon,” according to the quarterly budget status report that was presented by the office of CEO Mona Miyasato to the county Board of Supervisors on Tuesday. 

The CEO’s budget projection was based on cannabis tax receipts for October, November and December 2021, the second quarter of the current fiscal year. (This fiscal year runs from July 1, 2021 to June 30, 2022.) The quarterly report was on the board’s administrative agenda and was not subject to a public hearing, signaling a change from recent years, in which the supervisors held quarterly public hearings on the status of cannabis revenues, permits and licensing.

Using the state’s “Track-and-Trace” system, which provides data and analytics for all licensed operators, the county will be able to make more accurate projections regarding cannabis tax revenue in the future, the report said.

In all, it said, the county’s cannabis tax revenues for 2021-22, including both cultivation and retail, are projected to be $6.6 million less than what was anticipated last June. None of the six storefronts where marijuana can be sold in unincorporated areas are up and running yet, so the county’s tax revenue from cannabis retail is projected to be only $58,000 during this fiscal year, dramatically less than the $625,000 that was anticipated last June. The storefront operators are still in the process of getting their county zoning permits and business licenses; only one storefront is expected to be open by July of this year.

On the plus side, the county is projecting a $2.7 million boost in property transfer taxes over what was forecast when the 2021-22 budget was adopted, driven by historically low mortgage rates and the high demand for homes. Bed taxes that are assessed for hotel and motel rooms are trending $2.6 million higher than budgeted because of the public’s pent up demand for travel; and the county is projecting a year-end surplus of $2 million in sales taxes over what was forecast last June, reflecting the sustained growth of e-commerce and an uptick in holiday shopping.

Melinda Burns is an investigative journalist with 40 years of experience covering immigration, water, science and the environment. As a community service, she offers her reports to multiple local publications, at the same time, for free.

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sacjon Mar 10, 2022 01:01 PM
County Projects $6 Million Cannabis Revenue Shortfall for 2021-22

LITTLEBABY - well, don't forget legalization also reduced the number of people having their lives ruined by the police for some weed. Also, made it more acceptable and accessible for those who benefit from cannabis, such as cancer patients, insomniacs, people with epilepsy, the list goes on....

sacjon Mar 11, 2022 10:36 AM
County Projects $6 Million Cannabis Revenue Shortfall for 2021-22

FERNALD - do you know if local growers' crops are being sold in our local shops? I've seen a lot of manufactured products such as edibles, pens, etc, from out of town/state companies, but I wonder how much straight flower product is being sold in our stores? You'd think they would have some deal with local growers?

yacht rocked Mar 10, 2022 02:54 PM
County Projects $6 Million Cannabis Revenue Shortfall for 2021-22

Get the stores open and start collecting taxes. There are real legit medical uses for cannabis, which can replace prescription drugs commonly used for insomnia, anxiety, and pain relief, often without the accompanying side effects. On the South Coast, Carp Valley needs to produce bespoke cannabis in order to compete with much lower cost grow areas - similar to how SYV competes in wine. Unless that's successful, those ag lands and greenhouses will be under great pressure to be replaced by urban sprawl. Better to see ag than Irvine.

Luvaduck Mar 11, 2022 08:04 AM
County Projects $6 Million Cannabis Revenue Shortfall for 2021-22

It may be due to people trying it out, non-smokers finding out it makes them cough and in general, losing novelty. Once it's legal, it becomes no big thing and not a way to rebel. Somes find it makes them lethargic the next day or worry about gaining weight from the munchies. The initial rush to try marijuanna is over. If taxation is a percentage of sales not fees to be in business, the prices will probably drop except for CBD products used largely as medicine.

sacjon Mar 11, 2022 08:32 AM
County Projects $6 Million Cannabis Revenue Shortfall for 2021-22

LUVADUCK - that might account for a very small portion of the population, but every time I'm picking up my CBD (or a little treat) at any of the local shops, there are ALWAYS lines of people, any time any day. I don't think the BOS was counting on non-users to all of a sudden become cannabis consumers just because it's now legal.

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