Changes coming to Sonoma County's cannabis tax code

Taxes on cultivation and manufacturing will be eased for the next fiscal year, while retail sales tax will be brought in line with those in local cities.

photo credit: James St. John/flickr

This week Sonoma County's elected officials addressed cannabis business taxes.

According to staff analyst McCall Miller, Sonoma County’s cannabis taxes are comparable with those of our neighbors.

"We're right in line with Nevada County, Monterey County, Mendocino and Lake Counties," Miller said.

Currently outdoor cultivation is taxed at 75 cents per square foot. Mixed light cultivation is taxed at $3 per square foot, and indoor?

$12.50 per square foot.

But, county supervisors voted to change the cannabis tax rates for the next fiscal year, going with the staff recommendation Miller outlined.

"[Which will] adjust outdoor cultivation tax rate to 69 cents per square foot, adjust the mixed light cannabis cultivation tax rate to $2.51 per square foot, and adjust the indoor cultivation tax rate to $7.58 per square foot," Miller said.

Sonoma County will also cut the manufacturing tax in half, going from three percent to one and a half percent.

A more important adjustment though is to the retail sales tax.

Currently Sonoma County’s retail cannabis tax is two percent lower than local city rates, and among the lowest in the state.

Now Sonoma County will tax cannabis sales at three percent. The extra money will pay for an estimated $100,000 increase in administrative costs in the years ahead.

Supervisor David Rabbitt noted the changing fortunes of the cannabis market and tax landscape.

"Originally this was gonna be a cash cow and it's not," Rabbitt said. "And that's true for everyone, but be careful what you wish for, I guess in this particular case."

The new cannabis tax rates will go into effect in July.