Stanislaus County Tax Structure for Cannabis Cultivation (The Genezen Project)

The Genezen Project

Hon. Vito Chiesa, 2nd District, Chair

Stanislaus County Board of Supervisors

1010 10th Street, Suite 6700

Modesto, CA 95354

RE: Recommended Stanislaus County Tax Structure for Cannabis Cultivation

Dear Chairman Chiesa:

As per our recent discussions regarding the path for regulating cannabis businesses in Stanislaus County, we respectfully recommend for the Board's consideration a fair tax structure for cannabis cultivation.

Cannabis cultivators, currently providing medicinal cannabis to patients, understand all too well the need to create a tax system that provides the resources necessary to County agencies to regulate and control cultivation. We support a tax structure for cultivators that would provide a secure revenue stream for these County activities, while also ensuring that cultivation could be done in a transparent way that supports fully the robust regulation and control of cannabis mandated by the Medical Cannabis Regulation and Control Act and by the Adult Use of Marijuana.

We respectfully suggest that the cultivation tax structure recently adopted by the voters in Lake County in November 2016 by 62.7%, which provides: "An annual tax of $1 per square foot of an outdoor cultivation site, $2 per square foot of a mixed-light cultivation site, and/or $3 per square foot of an indoor cultivation site, subject to annual Consumer Price Index increases." This mirrors a similar tax adopted by 65.8% of the voters of Humboldt County.

The Genezen Project

Letter to Supervisor Vito Chiesa, Chair

Stanislaus County Board of Supervisors

February 27, 2017

Page 2

Adoption of a $1, $2, $3 in Stanislaus County, subject to voter approval, would make sense for the following reasons:

First, the tax would be easy to administer. The tax rate could be calculated based upon permit application alone, would be easy to verify, and would be self-executing. It would not require the kind of intense auditing that a production by yield or by weight system would require, and would not place any additional financial burdens on County government to verify that the correct amount of tax is remitted.

Second, the tax would assure retention of local cultivation businesses and discourage jurisdiction shopping for cannabis cultivators. This tax would help Stanislaus County grown cannabis compete successfully with cannabis grown in the so-called "Green Triangle" of Northern California, thereby contributing both to Stanislaus County's rich agricultural tradition as well as its employment and tax base.

Third, the tax would practically eliminate the lure for cannabis cultivators to operate in the shadows, and conduct underground cannabis operations hidden from law enforcement. It would also encourage compliance with cultivation tax obligations.

Fourth, the tax would discourage the incentive for some cannabis cultivators to resort to unwarranted use of pesticides and other growth agents to increase crop yields to remain competitive. This is a critical, but often overlooked issue, as the potential harms associated with excessive pesticide use for cannabis cultivation are driven by profit and greed.

As always, we appreciate your continuing interest in developing a comprehensive and fair regulations and taxes for cannabis businesses in Stanislaus County.

We look forward to speaking with you again as you move forward in your discussions with County staff, local officials, and with community stakeholders.

Very truly yours,

Tony Verruso

The Genezen Project

The Genezen Project

Letter to Supervisor Vito Chiesa, Chair

Stanislaus County Board of Supervisors

February 27, 2017

Page 3

cc: Hon. Jim DeMartini, 5th District, Vice-Chair

Hon. Kristin Olsen, 1st District

Hon. Terry Withrow, 3rd District

Hon. Dick Monteith, 4th District

c/o Clerk of the Board of Supervisors

Stan Risen, Chief Executive Officer

Mary Ann Lee, Managing Director, Health Services Agency

Milton O’Haire, Agricultural Commissioner/Sealer of Weights & Measures

Angela Freitas, Planning Director

John Doering, County Counsel

Tim Bazar, Public Defender

Hon. Birgit Fladager, District Attorney

Hon. Adam Christianson, Sheriff-Coroner


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