Mendocino county panel hears growerscalls to remove "true up" and weigh temporary tax cut
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Summary
Growers and industry advocates urged the Mendocino County General Government Committee to eliminate the annual "true up" minimum and consider a temporary deep reduction in the cannabis business tax; staff were asked to return with dollar figures and legal advice and the item was continued to April 22.
The Mendocino County General Government Committee spent more than two hours on March 25 hearing pleas from cultivators and industry representatives to remove the annual cannabis "true up" minimum and consider a near-term tax cut to keep small operators solvent.
Supervisor Haczek, who authored the item, told the committee the county has already reduced rates in recent years but growers remain under severe financial strain and he proposed an interim 50% reduction: "I think that maybe we should look at, like, 50%," he said, arguing that a temporary break could keep businesses in operation while staff explore longer-term restructuring.
Why it matters: the "true up" is a minimum tax mechanism tied to permit square footage that can produce a fixed bill even when a grower has little or no sales, cultivators and industry groups told the committee. Multiple public speakers said that disproportionally harms small and low-sales operators and urged a move to a sales-based or percentage model.
Auditor-controller Shamise Kavison told the committee that changing the true-up mechanism could be administratively simpler than repeatedly adjusting the base rate: "If we did something about the true up rather than the actual tax, it would be a whole lot less work, administratively," she said, and offered to provide the committee with the dollar amount billed this year through true-ups and an estimate of staff time required to process them.
County counsel cautioned that the legal outcome depends on the ballot language and code wording but signaled the board likely has authority to reduce or remove a minimum in the measure's text: "Usually, in terms of a tax ... you usually can lower it," counsel said, and agreed to return with a definitive opinion.
Public comment was heavily tilted toward growers. Steven Amato, president of the Mendocino Cannabis Alliance, described the structure this way: "It's like a cultivator has to think, if I'm gonna grow this year, am I gonna take this additional gamble ... of paying this $5,000 flat fee minimum." Several small cultivators asked the committee to consider going to 0% for a trial period or a one-year moratorium while the county studies a permanent change.
Staff and supervisors tried to balance relief for growers against fiscal impacts. Supervisor Haczek and staff noted the county budget currently includes roughly $1.445 million in projected cannabis revenue; eliminating true-ups or reverting to a 0% tax would shrink that revenue and the committee asked staff to quantify how much of the budget comes from true-up collections.
The committee identified three specific follow-ups for the next General Government Committee meeting: (1) the dollar amount and percentage of cannabis-tax revenue derived from true-ups, (2) county counsel's legal opinion on whether the board can remove the true up without returning to voters, and (3) options for short-term relief (including a 50% reduction or a 0% trial for 2027) and their likely fiscal impact. The committee agreed to continue the item to the April 22 General Government Committee meeting to give staff time to provide the requested data and analysis.
A separate, procedural motion to approve the minutes from the Oct. 22 meeting passed unanimously by roll call vote before the committee adjourned.
What was not decided: the committee did not adopt a change at the March 25 meeting; it asked for precise revenue and legal analysis before making a recommendation to the full Board of Supervisors.
Who said it (selected speakers referred in this story): Supervisor Haczek (item author); Shamise Kavison, Auditor-Controller-Treasurer-Tax Collector; County Counsel (legal advisor); Sarah McBurney, Mendocino Cannabis Division; Steven Amato, Mendocino Cannabis Alliance president; multiple cultivators including Mike Adams, Marty Klein, Matthew Browning and others who testified during public comment.
Next steps: staff will attempt to provide the true-up dollar amounts and a legal opinion to the committee and return the item for further consideration on April 22. The Board will receive recommendations after the committee has reviewed the requested data.
