California marijuana farmers that obtained legal cultivation licenses under Proposition 64 are already complaining to the Humboldt County Supervisors that taxes could bankrupt them.
Proposition 64, the “California Control, Regulate and Tax Adult Use of Marijuana Initiative,” legalized recreational marijuana cultivation, transport, and sale. Breitbart News warned that under Prop 64, industry participants could face $1 billion in federal taxes, plus another $1 billion in state and local government taxes.
The U.S. Internal Revenue Service is demanding a 35 percent federal tax rate. The State of California instituted a 15 percent excise tax rate on all final sales. Many cities are also packing on up to 25 percent in local taxes, plus a cultivation-per-ounce tax of $9.25 for flowers and $2.75 for leaves.
A group of 20 local Emerald Triangle farmers who received licenses last year to cultivate marijuana showed up at the supervisors’ Feb. 12 meeting to complain they are being driven into bankruptcy by Measure S, a $1-$3 per acre cultivation tax approved by voters in 2016 to maintain and improve county services. Farmers were especially irate about being taxed in 2017, despite California recreational sales being illegal until Jan.1.
The Eureka Times-Standard reported that “going legal” means taking on permitting costs and taxes that are pushing mom-and-pop operations out, and changing the character of the county. One of the protesters held up a sign calling out the Humboldt County rules as “All Stick, No Carrot.”
Second District Supervisor Estelle Fennell reportedly tried to convince the packed chambers that it was illegal to bring up a new issue under California’s Brown Act, which requires publishing agenda topics 72 hours before any meeting. The comment further incensed the growers, who fired back that the taxes could prevent them from making mortgage payments.
Marion Collamer, a marijuana grower and member of the True Humboldt marketing cooperative, was quoted by the Times-Standard as describing the farmers as, broken, exhausted folks who had paid much of their life savings to a bunch of consultants for an opportunity to make an honest living.
She said that the farmers’ financial pain is now starting to cause other local businesses to cut prices just to survive.