Stanislaus County’s cannabis tax proposal is dead. But the board approves lower fees
Stanislaus County won’t put a cannabis tax on the ballot in November.
The county Board of Supervisors was split 2-2 on the proposal Tuesday to ask voters to approve a uniform tax on cannabis retail, manufacturing and distribution businesses in the unincorporated areas.
Board Chairman Terry Withrow and Supervisor Channce Condit were opposed to a ballot measure. Supervisor Mani Grewal was absent.
The measure, if approved, would have imposed an initial 8% tax on the gross receipts of retail cannabis shops.
Two weeks ago, the board voted 3-2 in favor of putting the measure on the November ballot, but a four-fifths vote was required when the ordinance came up for a second reading Tuesday.
Some county leaders expressed concern July 12 that another tax on the November ballot might jeopardize a Modesto sales tax increase, a Modesto City Schools bond and other tax measures.
Withrow said Tuesday he has “buyer’s remorse” about the county’s legal cannabis program, which devoted much staff time and county resources to processing permit applications for dozens of commercial cannabis operations, some of which were vocally opposed by neighbors at public hearings.
Withrow said, in hindsight, he wishes he would have supported Stanislaus being a “dry” county.
Attorney Zach Drivon, who represents licensed cannabis businesses, urged the board not to put the tax on the ballot, citing the steep decline of the cannabis industry statewide. Drivon said the tax rate and other language in the proposed initiative would make things worse for cannabis operators.
The county is open to amending the fees in development agreements with ailing cannabis permit holders.
Tuesday, the board approved an amended agreement with Jayden’s Journey dispensary on Pentecost Drive in north Modesto. The revised agreement sets a new annual fee rate of $268,460 or 8% of gross receipts, whatever is larger, for this year and 2023.
The original five-year agreement required Jayden’s Journey to pay a flat rate between $430,000 and $520,000 annually, which was always greater than the optional 8% fee rate. The owners told the county the fee burden, coupled with poor market conditions, was driving them out of business.
The People’s Remedy, a retail and distribution business on Lone Palm Avenue in Modesto, also was approved for a reduction in fees. The permit holder is now expected to pay $331,270, or 8% of gross receipts, in 2022 and 2023, down from $600,000 to $700,000 a year.
County officials said fees in the original development agreements were based on optimistic sales projections after cannabis was legalized in California by a 2016 voter initiative.
This story was originally published July 26, 2022 at 3:57 PM.
