Taxes and Regulations Killing Off Small Cannabis Farmers In CA

Taxes and Regulations Killing Off Small Cannabis Farmers In CA

Taxes and Regulations Killing Off Small Cannabis Farmers In CA

The cannabis industry in California is leaving its pioneers in the dust while corporations reap all the benefits.

Humboldt County– The origin of cannabis consumption in the US- before and into legalization. This rural county in northern California is home to multiple plant genetics and grassroots, generations-old grow initiatives.

The modern world of cannabis as we know it would cease to exist without Humboldt County. A community of rural farmers who have been a part of the black market of cannabis production and the legal market. 

Drew Barber, 48, has grown cannabis in Humboldt County for over 15 years and has watched the price of his product shrink from $1,200/pound to a third of that today. 

“I’m not making it,” he said. “I can’t lose money from one year to the next, and it’s getting to be that time when I have to decide if I can go on.”

For once, it is not being strangled by law enforcement but rather by high taxes and regulations that have been marginalizing small cannabis farmers since legalization about six years ago. 

The story of Humboldt’s fate is revelatory. It signifies the hypocrisy of a once rogue and underground market becoming a public tax bonanza and playground for corporations to monopolize and stomp out the farmers who have been there for generations.

Following legalization, state officials’ decisions in regulations and legislation have driven many small farmers to the brink of bankruptcy. Meanwhile, billions of dollars go into industrial-scale growers with a market monopoly.

Taxes and Regulations Killing Off Small Cannabis Farmers In CA

Taxes and Regulations in CA Killing Off Small Cannabis Farmers

The course taken by State officials has left most of the regulatory power at the state level. Allowing for different counties to decide whether they want a cannabis industry or not. 

The state imposed multiple taxes on all aspects of the cannabis supply chain. This burden was unmatched in nearby legal marijuana states. Despite initially promising to do so, the state decided not to limit the number of cannabis cultivations and the number of grower licenses it would issue to farmers.

Due to this, the state is now aflush with tax revenue. A lot of it is coming from retailers and industrial-scale farmers.

There has also been a massive market glut in cannabis, hurting wholesale markets and leaving farmers like Barber unable to make ends meet. State regulations and omissions also have enabled a still-thriving black marketplace for marijuana. These growers can sell their products illegally beyond state borders and still get a high price.

The changes in the Humboldt hills due to state-policy decisions have also caused the slow disappearance of a unique way of life.

Back in the day, a small farmer could get $4,000 per pound for Humboldt flower. Today, a local farmer dumped three pounds of cannabis for $100 per pound out of sheer desperation. Additionally, other farmers are simply walking away from their plots.

California small business

Natalynne DeLapp, executive director of the Humboldt County Growers Alliance, said, “The government has actually managed to do in just a few years what the war on drugs couldn’t do in decades,” She continues, “It has killed the cannabis market.”

The state has taxed marijuana three times since 2018 when new legalization rules went into effect. Many cities and counties impose their taxes at varying levels on top of the state levies. One pound of cannabis can be subject to five different taxes in some parts of the state.

However, Oregon imposes just a 17% sales tax on cannabis. Additionally, the only product Oregon imposes sales taxes on is cannabis. 

California’s cannabis taxes are on top of licensing fees, and regulatory permits and can cost growers tens to thousands of dollars each year. In other words, becoming a legal grower is costly.

As a result, Gov. Gavin Newsom and the state bureaucracy are taking action on behalf of small farmers.

The most recent budget has a whopping $97 billion surplus. Newsom is removing the cultivation tax on growers, which has brought the state millions of dollars in one quarter alone. However, counties still have the jurisdiction to enact a cultivation tax if they choose to. 

Due to the devastating repercussions on small farmers, Humboldt County has cut the cultivation tax by 85%.

list of California growers

Taxes and Regulations in CA Killing Off Small Cannabis Farmers: “It didn’t have to be this way.”

Cannabis industry veterans claim it doesn’t have to be like this.

The state’s far north saw the long-term growth of marijuana. In the 1970s, a back-to-the-land hippie migration established a culture that accepted illegal drugs. The remote nature dissuaded intensive law enforcement.

The Emerald Triangle of Trinity, Mendocino, and Humboldt counties created an almost  mythological market around the cannabis grown in this fertile land. It is still a popular legend today.

Nature won in this region. The mountainous, marshy, and distant topography made it so there is no major highway through the area.

Similar to the landscape, this area had a Wild-West feel to it.

Humboldt County Sheriff William Honsal says, “By not capping licenses, there has been this flood of supply and I just would have thought our state would have been a little smarter with policies to allow small growers to make it.”

Ross Gordon, policy director of the Humboldt County Growers Alliance, said, “Glass House and others like it represent the massive upward transfer of wealth that is taking place within California’s cannabis industry,” Gordon said. “There is policy trying to get at some of these issue of disparity. But not nearly to the depth needed to fix an industry that is structurally broken.”

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