Supervisors direct staff to tie cannabis cultivation licenses to tax compliance, refer delinquent accounts to committee

Mendocino County supervisors voted unanimously to ask staff to draft changes to County Code section 10A.17 that would tie cannabis cultivation business license (CCBL) status to local tax compliance and to allow administrative review to terminate a CCBL for tax noncompliance.

The board’s action also referred the county’s delinquent cannabis business tax problem to the General Government Committee for a fuller approach to collection and program design. Sarah McBurney, senior program manager with the county cannabis division, told supervisors the county currently “holds about $1,200,000 in delinquent business taxes through current CCBL holders,” a figure she said excludes penalties and interest and covers roughly 200 licenses.

Why it matters: county staff and the treasurer/tax collector said the existing voluntary reporting model has left many cultivators unaccounted for and that past recordkeeping limits make collecting back taxes difficult. Shamice Cubeson, auditor‑controller/treasurer‑tax collector, said reported compliance with self‑reporting has been “anywhere from 50 to 60%,” complicating true‑up calculations and limiting collection options tied to more typical property‑tax tools.

Board debate centered on how to balance enforcement with fairness and on which venue should refine options. Supervisor Haschak moved the three‑part motion — require tax compliance for CCBLs, adopt administrative review for terminations based on tax noncompliance, and refer delinquent taxes to the General Government Committee — citing the need for clearer consequences for noncompliance. Supervisor Williams asked county counsel for an opinion on whether the board can lawfully tie tax payment to permit renewal and also requested counsel assess authority to drop the minimum tax and its associated true‑ups.

Industry and community commenters voiced mixed views. Steven Amato, president of the Mendocino Cannabis Alliance, said the industry “needs a better way of taxation for cannabis” and cautioned against blanket removals of licenses without due process; he urged the county to move toward gross‑receipts taxation rather than the current true‑up approach. Hannah Nelson, who reviewed delinquency issues, recommended a careful cost‑benefit analysis before attempting to quantify and collect older delinquencies.

What the motion does: the board’s motion instructs staff to draft ordinance language tying CCBL standing to tax compliance, to propose an administrative review option for termination for tax noncompliance, and to send delinquent‑tax options to the General Government Committee for detailed study. County counsel will be asked to issue an opinion on legal authority to tie tax payment to permit renewal and on reducing or removing the minimum tax/true‑up mechanism.

Next steps: staff will return with draft ordinance language and the requested legal opinion; the GGC will examine collection and policy options for the approximately $1.2 million in delinquent accounts and report back to the full board.