Monterey County Cannabis growers react to new tax rate

Cannabis growers are reacting after the Monterey County board of supervisors decided to cut their taxes.

Many growers had been pushing for this move, saying the county tax was too much for the industry to handle.

That vote to lower taxes came Tuesday at the supervisors meeting, cutting the current tax to a third of what it was.

Growers are saying it’s a big step forward for the young industry and it still may not be enough.

It’s a move cannabis growers were hoping for.

Slashing the tax rate they once struggled to afford, to $5 per square foot.

“There is a massive and pervasive disconnect between how much money the regulators and the public think marijuana operators have and actually how much money we have to operate,” said Gavin Kogan with Grupoflor, which oversees cannabis companies.

He says the former greenhouse tax rate of $15 set in 2016, was at a time when cannabis prices were different.

“A pound of marijuana was selling for $3500 a pound,” Kogan said, “We are selling pounds of marijuana right now for anywhere from $900 to $1200 a pound.”

While the new tax rates are a relief for growers, many of them in Monterey County say they’re not out of the woods yet financially.

“Truthfully it is going to take some time for all of our companies to really generate the cashflow to successfully pay these payments without being in a stressful state,” said Michelle Hackett, president of Riverview Farms in Salinas.

They moved from growing flowers to cannabis close to two years ago.

“It’s taken quite a bit of financial backing to get these greenhouses up to par,” Hackett said.

And Michelle says the high tax rate added extra challenges.

“In order to generate that kind of revenue there has to be the proper legal outlets for us to sell pounds,” Hackett said.

Though she and other growers say they understand the need for taxes even the new rates will be difficult.

“We are willing to pay a tax, it just needs to be at a reasonable rate and over a time period where it seems appropriate,” Hackett said, “As the industry matures there may be a time where we’re able to pay 5, 10, even 15 dollars at one point but where we are right now, where we are currently, we are still in start-up mode.”

The new cannabis tax rates in Monterey County will take effect on July 1st.