At the office of Monterey County’s Treasurer-Tax Collector, armed- guards now stand watch over the parking lot and lobby door. A recently restored front office now serves as a secure drop-off point for taxpayers hauling big bags full of cash. A fleet of state-of-the-art currency counters stand ready to quickly record unprecedented sums of paper bills. And the regularly scheduled armored truck pickups are now passing through at a swifter clip.
Monterey County is among the many towns in California and counties discovering a tough reality as they position themselves for a share of the state’s newly legalized marijuana proceeds: Tax collecting in cannabis country comes with its share of obstacles. And there’s no “how to” guide.
“It’s been a challenge just to craft all of this from scratch,” county Treasurer-Tax Collector Mary Zeeb stated from her office in Salinas. As of the first of this year, all licensed medical pot growers in unincorporated Monterey County owe Zeeb’s office $2 for every square foot they farm. That’s thanks to a measure passed by an overwhelming 74 percent of the county’s voters last November, who decided that if cannabis is going to be a mainly-legal local industry, the county treasury might as well get in on the action.
Among the list of questions that city fiscal analysts and county councilmembers are now puzzling over:
• What is the “sweet spot” tax rate that will keep local budgets in the black without chasing growers and vendors back into the black market?
• Who exactly are the officially licensed weed dealers in their jurisdiction?
• When taxing an industry that is effectively barred from the traditional banking sector, what do you do with all their cash?
• And just how do you audit a pot farm anyway?
“We set up our processes, and we hoped that they were going to work. So far, I’ve been pleasantly surprised that they mostly have,” says Zeeb, now processing the first quarter of collections.
Monterey County records taking in roughly $700,000 from 60 farmers. Those tax bills were based on self-report yield data from the farmers themselves, but once all the permits are finalized, Zeeb says each grower will be taxed based on his or her permitted acreage.
“This is kind of the startup period,” she says. “We had a very steep learning curve.”
Monterey County isn’t the only local government learning on the fly. This past election, more than 30 cities, and nine counties put marijuana tax propositions on the ballot. All but two were approved—and more measures have been scheduled during special elections ever since. These taxes mainly apply to medical marijuana but were designed to include recreational marijuana once the state begins issuing permits no sooner than the beginning of next year.
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