Santa Barbara County reports $835,000 in cannabis tax receipts for Q1, staff warn of industry contraction

County staff presented the first‑quarter fiscal 2024–25 update on cannabis taxation, compliance and enforcement at the Jan. 14 Board of Supervisors meeting, reporting $835,000 in gross cannabis tax receipts for the quarter and noting the program is currently tracking about 13% below the $6.1 million adopted annual projection. Deputy CEO Britney Oderman and Cannabis Program Manager Carmela Beck said the county had 51 operators required to report for Q1; 41 reported receipts, nine reported zero because they did not harvest, and one did not report because its state and county licenses are not being renewed.

Treasurer/Tax Collector staff told the board they had contracted HDL to perform audits of quarterly reports and that HDL had finalized one of two audits for the prior audit period; staff are conducting additional two‑year look‑back audits to verify reported gross receipts. The county has authorized about $132,000 for six cultivation audits in the current fiscal year; staff said they have spent roughly $24,700 so far and expect future audits to cost approximately $15,000 each.

Public‑safety and compliance activity was also highlighted. The sheriff’s office reported five enforcement actions in the quarter with plant and dry product seizures; Commander Rainey told supervisors those actions targeted illegal grows and processing operations and that enforcement is focusing on smaller hidden operations as larger nonconforming sites have left the county.

Supervisors pressed staff on volatility and next steps. Supervisor Lee asked why the report lacked full‑year projections; staff replied the adopted projection is $6.1 million and that seasonal, harvest and reporting timing largely account for quarter‑to‑quarter variance. Staff said the county is working with third‑party price databases and HDL audit findings to improve valuation for gross‑receipts taxation, and that a billing and auditing contractor is being finalized to support ongoing compliance work.

Staff recommended the board receive the quarter‑1 update; supervisors requested future reports break out indoor, greenhouse and outdoor revenues, provide clearer net revenue accounting and show enforcement outcomes (charges and convictions) alongside enforcement actions. The board unanimously approved staff recommendations to receive and file the report and directed further detail in upcoming quarterly updates.