Memorandum
Date: January 25, 2022
To: The Honorable Lake County Board of Supervisors
From: Carol J. Huchingson, County Administrative Officer
Subject: Consideration of Suspension of CPI Tax Rate Increase for Cannabis Taxes
Executive Summary:
This year, the various tax rates set by the County’s Cannabis Cultivation Tax and Cannabis Businesses Tax will increase according to the Consumer Price Index (CPI). During the past year, the price of cannabis in the legal market has dropped considerably, which has caused widespread concern throughout the industry at both the state and local level.
The primary tax burden facing cannabis cultivators stems from the State cannabis taxes. This is especially true in Lake County, where the local cannabis rate is comparatively low. Looking solely at these cultivation taxes, it is estimated that Lake County local taxes make up less than 15 percent of the total taxes owed by a cultivator, a ratio which decreases even further when other taxes are taken into consideration.
While it is difficult to offer significant relief at the local level, given the scope of the State taxes imposed, staff would recommend consideration of suspending further increases to the local cannabis tax for 1 - 2 years. If no action is taken, the County imposed taxes would rapidly increase even as prices remain depressed.
Staff recommends your Board provide direction to staff.
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Estimated Cost: ________ Amount Budgeted: ________ Additional Requested: ________ Future Annual Cost: ________
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Recommended Action: Provide staff direction.