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San Luis Obispo County will tax cannabis. How high is yet to be decided

The Associated Press

San Luis Obispo County supervisors aren’t interested in local government getting rich off the backs of cannabis producers and consumers through heavy taxation.

So they’re planning to levy taxes and fees that will pay for the expenses of regulating the industry, which is estimated to cost the county about $1.2 million this fiscal year.

It’s not yet known how high the taxes and fees will be. Other cities and counties across the state have proposed taxes ranging from around 3 to 20 percent.

The board discussed the issue for the first time Tuesday. A specific fee and tax plan will be brought back to the board for a possible vote in November before being placed on a June ballot for county voters to approve or reject.

Any county taxes will be on top of those leveled by the state. Beginning Jan. 1, when California begins issuing commercial cannabis licenses, the state will impose a 15 percent flat tax on purchasers of all cannabis and cannabis-related products and will impose a tax on cannabis farmers of $9.25 per ounce of buds and $2.75 per ounce of leaves.

All county supervisors Tuesday generally agreed that it was inappropriate to generate extra revenue for non-cannabis related programs from the industry, though Supervisor Adam Hill suggested that some funds generated could go toward drug and alcohol treatment programs.

All agreed there should be a buffer for unexpected costs.

“The people I know that want to be in this business are not large corporations,” Supervisor John Peschong said. “They’re small family businesses, and I don’t want to suffocate them out.”

He also said he doesn’t want legal cannabis businesses to have to pay for law enforcement of illegal businesses. Taxes that are too high might push businesses into the black market, supervisors said.

“We need to make it relatively easy and attractive to be legal,” Supervisor Bruce Gibson said.

Supervisor Lynn Compton suggested that the county apply a similar tax as neighboring counties to neither encourage nor discourage cannabis activities in San Luis Obispo County.

Monterey County, for example, is proposing a tax of $25 per square foot on farmers, $5 per square foot on nurseries and 10 percent of gross receipts on all other cannabis-related businesses.

One question that still remains is whether medical cannabis producers will be taxed by the county at the same level as recreational producers.

Compton and others said they didn’t want to tax medical suppliers the same but acknowledged that differentiating the two may be difficult.

Monica Vaughan: 805-781-7930, @MonicaLVaughan

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