Grow, sell and tax

Commercial cannabis activity could soon expand in the capital region, as local jurisdictions consider an end to prohibitions.

While California voters approved retail cannabis sales in November 2016, the law also gave cities and counties the authority to reject or approve them. According to the dispensary listing website Weedmaps.com, about 85 percent of the state’s counties and cities have bans in place.

In the capital region, Sacramento, Placer and El Dorado counties prohibit the growing and selling of retail weed in unincorporated areas. The city of Sacramento is the region’s only jurisdiction allowing commercial sales and cultivation, while West Sacramento and Yolo County allow cultivation and Davis allows sales.

El Dorado County may soon open the doors to commercial cannabis, too.

On July 17, the El Dorado County Board of Supervisors voted to place five legalization measures on the November ballot. Voters will consider a tax to cover cannabis enforcement costs, cultivation of medical marijuana, cultivation of commercial marijuana, retail sales of medical marijuana and retail sales of commercial marijuana. The votes would only cover the unincorporated areas.

“If voters pass all these measures, the county will have both the fiscal resources and the law to keep its economy that’s based in part on cannabis and protect the community from unapproved cannabis growing,” said Rod Miller, legislative director of the El Dorado County Growers Alliance.

For a topic that still generates a lot of controversy, the discussion at the July board meeting was notable for its lack of disagreement. Only one supervisor, Shiva Frentzen, registered any concern about the ballot measures, and that was because she didn’t like the idea of county voters returning to a question they’d already answered in 2016 when they voted to legalize cannabis via Proposition 64, the Adult Use of Marijuana Act. (Actually, El Dorado County voters rejected the proposition.)

But the support for the ballot measures was less an endorsement of commercial cannabis than a realization that regulation is the right approach. Cannabis cultivation is widespread in El Dorado County, even without the county’s blessing, so officials want tax revenue to respond to it.

“We have a marijuana problem,” said Supervisor Michael Ranalli. “We don’t have an effective way of dealing with it.”

Sheriff John D’Agostini, a longtime foe of commercial cannabis, didn’t even address the board. A county staffer said that’s because the sheriff recognizes the need for a revenue source to police illegal cannabis activity.

County staff presented the board with figures from Stanislaus County, where officials estimate it costs $3.1 million a year to enforce laws against illegal cannabis businesses.

“We all agree that the unregulated market is the problem,” industry attorney Dale Schaefer told supervisors in El Dorado County.

Portraying the ballot measures as a responsible approach to an inevitable problem—as opposed to an endorsement of cannabis consumption—could help win approval.

That was the case in Yolo County, where voters also rejected Proposition 64 but supported the tax measure by an overwhelming margin, with 79 percent in favor during the June election. The tax applies to marijuana cultivation, as Yolo County does not allow retail sales.

The tax was essential for the future of cultivation in Yolo County because supervisors included a poison pill in the measure that called for the end of grows without tax revenue to regulate them. Following the vote, supervisors expanded the authority for cultivation and allowed for commercial cannabis grows and not just medical marijuana.

In El Dorado County, tax rates would vary by activity, and the measures don’t set specific amounts, but rather ranges that the county would have to stick to. For instance, for retail sales, the county would have to set a tax rate between 4 percent and 10 percent.