MENDOCINO Co., 2/26/22 — The Mendocino County Board of Supervisors will tackle a variety of cannabis topics during a March 2 special meeting. The discussion comes at a moment when county cultivators are debating a host of challenges they face this season: the uncertainty of the current market, the drought, and the complexities of local permit approval and compliance assistance grants. With ongoing regulatory uncertainty, growers are up against the clock to make hard decisions as the start of outdoor planting season draws closer.
Beginning at 9 a.m. Wednesday, supervisors will discuss a number of agenda items (found here), the simplest of which may be changing the name of the county’s program from “Mendocino County Cannabis Program” to “Mendocino County Cannabis Department,” intended to reflect the program’s journey from part of the agricultural department, to planning and building services, to becoming a stand-alone department in 2021. Other agenda items include creating an appeals process for permit application denials, a discussion of $17 million in state-allocated “local jurisdiction assistance grants,” and the need to create an extended “stay-of-cultivation” and tax relief for permitted farmers.
The last item, sponsored by District 3 Supervisor John Haschak, addresses the need for permitted farmers to temporarily stop growing yet still maintain legal standing—and what the costs of doing so might be. One proposal creates a method for farmers to extend a “stay-of-cultivation” without facing a minimum required tax or other cost of compliance.
The county’s current program includes a provision for cultivators to take a single year off. This spring, facing financial challenges based on market prices, compliance costs, and the ongoing drought, a number of permitted farmers are considering not growing this coming year, but are concerned doing so might jeopardize their legal standing or require ongoing costs.
Due to California’s dual-permitting commercial cannabis permitting system, many farmers pay both state and local taxes, and pay a set tax based per foot or pound, not on the value of their sales — which means as prices have dropped, the overall percentage of revenue going towards taxes and fees has increased. Permitted cultivators and cannabis business owners have called for tax relief in order to address both the ongoing costs of compliances and dramatic changes to the market, leading to protests in Sacramento and around the state last fall.
Earlier this month, the North Coast’s State Senator Mike McGuire proposed state legislation that would change the method for cultivation excise taxes to one based on sales, but whether that relief will come in time for local cultivators to budget for this year is unclear.
Another agenda item seeks to establish an appeals method for cultivators who have been denied or rejected during the permit application process. New applications are not being accepted by the county, but many cultivators seeking licenses have been waiting for responses to applications submitted to the “portal,” established in 2021 to address the significant backlog of county permit applications and streamline the paperwork required of applicants, which has been an ongoing issue since the program’s inception. Many hopeful permittees are finally receiving responses or denials and are requesting a clear method to address the decisions with program staff. The agenda item suggests staff develop a proposal for appeals before May 1.
The agenda also covers a significant chunk of state grant funds: Mendocino County received over $17 million via the “local jurisdiction assistance grant program” in late 2021, of which more than $10 million is available to create a program assisting local cultivators with transitioning from provisional to annual state licenses. How the county will establish a program to allocate this money will be up for discussion on Wednesday.
The catch-22 many local farmers are facing is that they are required to meet a wide range of requirements to receive full permit approval, and there have been grant funds established to help with some of said compliance costs. However, the vast majority of those grants have not yet been disbursed to farmers — who then receive permit denials. For example, a farmer hoping to qualify for funding to remediate their roads could be denied a permit prior to receiving the grant to pay for the work — and there is no process currently established to appeal the denial.
Local cultivators have also sought to access the over $3 million in state “equity grant” funds sent to Mendocino County, a separate fund that is also supposed to assist longtime farmers with compliance-related needs, although the application parameters have changed several times since its inception. The first round of applications opened last year, but effectively no money was sent to farmers in 2021. During a discussion with supervisors in late 2021, grant administrators said that ongoing delays were due to requirements on the processing of awarded grants, and that they expected additional funds to be disbursed to cultivators in subsequent grant rounds this year.
The full special meeting agenda can be found here. To submit public comment, click on “eComment” on the agenda link, or follow this link.