Cannabis tax measure before the Nevada County BOS on Tuesday for the November ballot

NEVADA CITY, Calif. July 5, 2018 – On Tuesday, July 10 at 10:30 am, the Nevada County Board of Supervisors will vote on a proposed ordinance/ballot measure to establish a cannabis business tax on all commercial cannabis activity in the unincorporated areas of Nevada County.

The tax measure’s initial 2.5% rate on gross receipts on cultivation only is expected to generate approximately $1.5-$3.5M annually. This is a best guess estimate based on local outreach and discussions with the industry in regards to the number of applicants that may apply for and receive licenses, according to the staff report.

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At this time, Nevada County does not have a permanent ordinance regulating the commercial cultivation of cannabis. After public meetings, a year-long citizens advisory committee process and countless BOS items, a permanent ordinance is not expected to see the light of day before Spring of 2019. However, the staff report justifies placing the measure before voters by stating “it is important for us to move forward with the placement of the Commercial Cannabis Business Tax Measure on the November ballot so that the rate and structure will be in place when the permanent ordinance is put into place. If we do not move forward with the placement of the measure now, our next opportunity will be in 2020.

Purpose of tax

In the event that new revenue becomes available following voter approval of the Commercial Cannabis Business Tax Measure, the proposed Resolution includes draft spending priorities based on community priorities. These high-level draft spending priorities for the general purpose cannabis business tax include:

  • Enhancing crime prevention and investigation

  • Maintaining public safety

  • Environmental regulation/enforcement

  • Cannabis licensing and operation regulation/enforcement

Because of legal constraints, a general purpose business tax cannot be dedicated to specific purposes without triggering a two-thirds voter approval requirement. These draft spending priorities provide a general outline for the high-level uses of new revenue, but the actual allocation of tax revenues would be done as part of future budget deliberations. [source: staff report]

Text of the proposed ballot measure:

“To maintain/improve essential services including public safety, crime prevention/ investigation, environmental regulations enforcement, neighborhood protection, and other County services, shall the measure establishing cannabis business tax rates not to exceed $10 per square-foot or $8 per ounce on cultivation and/or up to 10% of gross receipts for all cannabis businesses in unincorporated Nevada County, generating an estimated $1.5-3,000,000 annually, unless/until repealed, with financial audits, no money for the state, be adopted?”

A 4/5ths vote is required to adopt the ordinance establishing the tax and to place the measure before voters in the November 2018 General Election.