Memorandum
Date: March 3, 2020
To: The Honorable Moke Simon, Chair, Lake County Board of Supervisors
From: Carol J. Huchingson, County Administrative Officer
Subject: Discussion of Cannabis Tax Revenues and Accrual Methodology
Executive Summary: (include fiscal and staffing impact narrative):
At the previous Board of Supervisors meeting on February 25, 2020, there was a request for follow up on whether any type of proration would be applied to a tax bill. There are two applicable sets of circumstances that are described below.
Initial Issuance of the Permit
On May 14, 2019, the Board of Supervisors passed Resolution 2019-70. This resolution provided an option to set a cultivation start date other than the permit issuance date. Before this resolution, taxes began to accrue from the date of permit issuance, rather than the start of cultivation. The resolution reiterated that pursuant to the ordinance, taxes begin to accrue on the date on which a person becomes engaged in legally-authorized cannabis cultivation.
In this situation, the possibility of proration would exist for cultivators just receiving their permit. If their permit were to be issued on the last day of a billing cycle, or if they were to declare their commencement date as being the last day of that billing cycle, they would receive a prorated bill for that period. Rather than being billed the entire annual tax assessment for that day of operation, they would be charged 0.27% of that annual cost.
Under the current structure, this possibility of proration could only occur once, and that would be in the first year of operation for a cultivator. After the first year, there remains only the option to provide a declaration of non-cultivation to avoid a tax bill, meaning that a cultivator is either paying the full annual assessment or nothing at all as will be discussed below.
Declaration of Non-Cultivation ("Opt-out")
On November 5, 2019, the Board of Supervisors passed Resolution 201...
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