Santa Barbara County cannabis businesses bring in $5.5 million in tax revenues

Santa Barbara County has recorded the second-highest numbers for cannabis businesses licenses and cultivation acreage in the state, bringing in $5.5 million in tax revenues for the fourth quarter — strikingly more than the $1.9 million brought in during the third quarter.

“The tax revenue for the fourth quarter dramatically exceeded our revenue expectations,” assistant county executive officer Barney Melekian said, but noted that $1.1 million of that revenue came from late payments from the third quarter.

As of Aug. 19, county operators hold a total of 1,133 active, provisional and annual state licenses, according to fiscal and policy analyst Steve Yee. Lompoc, the Santa Ynez Valley and Carpinteria make up the majority of licenses held.

Throughout the fourth quarter, 45 operators submitted 75 county cannabis business licenses; 16 licenses have been issued, and 59 remain pending. The majority of licenses applied for and issued came from cultivators and nurseries.

Forty-three cultivators applied for business licenses, and eight were issued. Twenty-seven business licenses came from nurseries, and seven of them were issued. Yee noted that county businesses licenses are valid for one year and must be renewed annually.

Acreage incorporated with the county’s state licenses makes up 297.2 acres, with the same three areas holding the most land. Lompoc contributes 104.6 of those acres, the Santa Ynez Valley contributes 97.1 acres and 67 come from Carpinteria.

The Planning and Development Department was sent a total of 10 land use permitting applications during the course of the quarter. There are seven pending land use permit applications, two pending coast development permit applications and one issued land use permit.

The county has received 199 applications since the program’s inception, according to Yee.

“Planning and Development staff remain diligent in reviewing and processing these applications with the goal of approving these permits and, ultimately, final issuance,” Yee said.

Fourth-quarter applications called for 2,614 cultivation acres within the unincorporated inland area, and 260 of those acres have already been permitted. Proposed acreage in the inland area is up 162 from the previous quarter, Yee noted.

In the coastal zone, which includes the Carpinteria Agricultural Overlay District, there are 215 application-associated cultivation acres with 22 acres already permitted. Two additional acres were added in applications since the third quarter.

However, two cultivation acreage caps in the Carpinteria Agricultural Overlay District and the remaining unincorporated inland area were adopted by the Board of Supervisors. The cap for the coastal zone is 186 acres, and the cap for the inland area is 1,575 acres.

“Not all applicants will be able to reserve their acreage under these respective caps in place,” Yee said.

Cannabis enforcement activity continued at a slower pace during the fourth quarter, partially because of the COVID-19 pandemic and halting inspections by the Sheriff’s and Agricultural Commissioner’s offices, which did not start back up until May, according to Melekian.

Planning and Development opened up four new cannabis cases over the course of the fourth quarter, and no cases were closed. The department responded to 88 complaints, which mostly pertained to odor, according to Melekian.

Planning and Development held virtual community engagement meetings in July to discuss the retail storefront selection process, Melekian said. Staff presented to the board in August an updated selection process timeline and scoresheet criteria for the Business Operations Proposal and Neighborhood Compatibility Plan.

Staff anticipates opening the application submittal period by mid-October and making the application available by mid-September to give operators ample time to complete the application, Mekelian said.

Planning and Development looks to continue better alignment with the land use permitting and the business license process. It will encourage operators to submit business license applications through the Accela public facing portal, an online application process the department transitioned to in the fourth quarter.

Some objectives for the upcoming quarter include commencing the retail storefront license selection process, phasing out the 12 cultivation operations located within existing developed rural neighborhoods, present the KPMG findings and implementation plan relating to their assessment of the county’s cannabis permitting and business licensing processes, and continue business licensing improvement to streamline the process.