The Santa Cruz County Board of Supervisors voted on Nov. 18 to amend the county’s cannabis business tax (CBT): non‑cannabis ancillary goods sold by dispensaries would be exempt from the CBT, and gross receipts from on‑site consumption would be taxed at 1% rather than the 7% rate that applies to retail cannabis sales.

Deputy County Executive Melody Serino and Cannabis Licensing Manager Sam Laforte presented the proposal, which the board had previously directed staff to explore. Cannabis business owners said the current CBT as a gross‑receipts tax burdens their ability to diversify services and compete with the illicit market. “All we’re asking is that the cannabis business tax specifically applies to cannabis items,” said Bryce Barriessa of Treehouse Dispensary, who urged an exemption for t‑shirts, event tickets and other non‑cannabis sales tied to hospitality and on‑site consumption.

Why it matters: proponents argued the changes will help licensed businesses remain viable as they invest in consumption lounges, farm tours and hospitality models; opponents — including Supervisor Martinez — said a 1% rate risks reducing county revenues at a time of fiscal strain and may under‑compensate for potential public‑health and enforcement costs associated with expanded on‑site consumption.

Board action: Supervisor Cummings moved staff’s recommendation and Supervisor Koenig seconded. The motion passed 3–2: Supervisors Koenig, Cummings and Chair Hernandez voted Aye; Supervisors DeSerpa and Martinez voted No. The county will adopt ordinance language reflecting the exemption for ancillary non‑cannabis goods and the 1% CBT on consumption sales; staff said the auditor‑controller will track consumption‑lounge receipts separately and report when lounge activity begins.

The vote is conceptual (amending the tax code language); the board’s action changes tax treatment as requested in prior board direction and is intended to align county tax policy with new on‑site consumption business models.