Santa Barbara County’s cannabis tax revenue continues to rise – Santa Maria Times

The trend of increasing revenues from cannabis taxes is continuing in Santa Barbara County, according to a second quarter report to be delivered Tuesday to the Board of Supervisors.

During the second quarter of the 2020-21 fiscal year, cannabis tax revenue was $2.6 million, according to the report prepared by Brittany Heaton, principal cannabis analyst, and Steven Yee, fiscal and policy analyst.

In the second quarter last fiscal year, the revenue was $2 million, and in 2018-19, the first year of legal recreational cannabis in California, the tax revenue for the county was $1.8 million.

That roughly mirrors the trend from the first quarter revenues, which started at $1.8 million in 2018-19, rose to $2.8 million in 2019-20 and jumped to $4.2 million in 2020-21.

If the trend of steady increases continues through the third and fourth quarters this fiscal year, it could provide ammunition for supervisors who would like to see the cannabis income considered ongoing revenue allocated to specific county services.

In fact, the midyear financial report delivered to supervisors last Tuesday estimated cannabis tax revenue for the year will be $3.4 million more than anticipated when the 2020-21 budget was prepared.

By county voter mandate, cannabis tax revenues are first applied to cover the cost of administering county cannabis regulations, assuring compliance and conducting enforcement operations.

Portions of the remaining balance have then been used to pay for other county services like law enforcement and health care — “things that make our community better,” said 3rd District Supervisor Joan Hartmann.

But those infusions of funds have been considered one-time revenues to keep the county from “getting dependent on it because we weren’t sure what the [cannabis] market would be like and what the revenue would be,” Hartmann said.

First District Supervisor Das Williams agreed that was a good reason to consider cannabis tax revenues one-time funds.

“The first year we had revenue that was questionable, but, of course, we didn’t know how the industry would perform,” he said, adding that now three years out, the industry is showing continuing growth.

For that reason, both Williams and Hartmann would like to see at least a portion of cannabis taxes considered an ongoing source of revenue that can be applied to specific uses.

In the 2020-21 budget, cannabis revenues helped cover the costs of responding to the COVID-19 pandemic and backfill losses in social services funding, with $658,664 allocated to maintain hours and avoid discontinuing services at the county’s branch libraries.

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That’s where Hartmann would like to see cannabis taxes used as ongoing revenue “because our libraries have such an unusual [organizational] structure” with regional administrators getting money from cities and the county, and cannabis revenue “would make their budgets more stable.”

“I’m a big believer in libraries,” she said. “I know there are many competing interests in the county’s departments … and we’re looking at everything through an equity lens. But libraries check so many boxes.”

Hartmann said libraries bring communities together and promote equity through access to the internet to apply for jobs and connect with services.

Williams also said he supports using cannabis tax revenues as an ongoing source of funds for libraries, adding that those involved with libraries have a phrase for the support it’s already provided: “Weed for read.”

But there are other uses he thinks are equally important.

“On a practical level, during coronavirus we have faced an unprecedented need at the same time revenue has gone down,” he said. “At the same time, the pandemic has made homelessness worse, with shelters filling up as those on the margin of society unable of making their rents.”

Williams said he would like to see the county build more supportive housing or acquire a hotel to address homelessness, which could cost more than $5 million.

“Behavioral wellness funding is also decreasing because statewide sales tax revenue is down,” he said. “I do think there’s a pressing need to use marijuana tax revenue as an ongoing source.”

But both supervisors also expressed some reservations, with Hartmann referring to increasing competition as more states legalize recreational use of cannabis and the appearance of a strain of hemp that’s hallucinogenic but legal.

“There’s a question about how reliable in the future cannabis revenue will be,” she said.

Williams said the goal has been to take something that’s a drain on society — black market weed, where the money it makes goes to bad people — and change it so they revenue goes to benefit the public.

“That doesn’t mean we aren’t without risk,” he said. “I’d feel much more comfortable if our two highest [cannabis] taxpayers were permitted. They’re going through the process but they don’t have permits yet. But I do think it’s fair to commit a portion of [cannabis tax] to ongoing revenue.”

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