Big drop in cannabis permit applications leads to lower Sonoma County tax projections

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Sonoma County officials expect a dip in cannabis tax revenue in the coming fiscal year, down from $3.5 million in fiscal 2017-2018.

That was due to many cannabis businesses in the unincorporated areas failing to meet the requirements of the penalty-relief program, under which the county allowed cannabis businesses operating before it was legalized statewide to apply for permits, according to Tim Ricard, cannabis program manager at the Sonoma County Economic Development Board. California legalized pot for recreational use in January 2018.

“They weren’t able to meet some of the program requirements,” he said.

For one, many had failed to submit a completed land-use application by the June 1 deadline, Ricard said. About 235 businesses participated in the program at its peak, but that number was now down to roughly 65, he said.

Nine cannabis businesses opened in Santa Rosa over the past three years, contributing about $930,000 in tax revenues from the city’s marijuana industry, the Press Democrat previously reported.

It was not clear how much revenues from the county permits would go down, but “$3.5 million will likely be the high-water mark for a couple of years,” Ricard said. A clearer forecast of revenues would come into focus in the next six to eight months, he said.

The county program was established in 2017 and expanded later that year by the Board of Supervisors. The majority of applicants focused on cannabis cultivation, Ricard said.

Permits cost about $2,500 for applicants seeking to start operations under 10,000 square feet and on specific agricultural parcels, while minor use permits inside industrial buildings run about $8,000, Ricard said.

“Full-blown” use permits from Permit Sonoma for cannabis manufacturing, distribution and up to an acre of cultivation cost roughly $16,000, he added.

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