Board of Supervisors — 2017-12-14

Cannabis Regulation, Licensing, and Taxation

• Stakeholders debated proposed tax rates, with industry representatives urging lower rates to maintain business viability and community groups opposing interim licensing prior to ordinance adoption.
• The Board discussed the cumulative impact of taxes on the supply chain and acknowledged market data indicating that production capacity significantly exceeds legal consumption.
• The Board passed a motion to proceed with the item by a vote of 4-1.

Cannabis Taxation and Licensing Framework

• Discussion focused on establishing a tax structure that balances competitiveness with enforcement needs, with staff recommending a general tax to avoid higher voting thresholds.
• The Board considered requiring a four-fifths vote for future rate adjustments and debated the distinction between general and special tax designations.
• Staff indicated they would return in January with a draft ballot measure and fiscal impact statement pending further direction on the specific rate structure.

Letter to the State Regarding Cultivator Compliance

• The Board discussed a letter to the state clarifying that the county lacks a process to adjudicate claims of legal non-conforming status under Article 10.
• Staff clarified that the letter is a communication of regulatory posture rather than a license, and the Board debated specific language to avoid implying a specific timeline for ordinance finalization.
• The Board passed a motion to direct staff to prepare the letter with suggested modifications and a separate motion to determine the action is exempt from CEQA review.

Cannabis Banking and Financial Compliance

• Staff presented FinCEN guidance for financial institutions serving cannabis businesses, noting industry reports of monthly compliance costs ranging from $5,000 to $7,000.
• The State Treasurer’s report identified critical steps including implementing efficient cash handling, creating a compliance data portal, and conducting a feasibility study for a public bank.

Licensing, Staffing, and Enforcement Estimates

• Staff outlined licensing requirements including background checks and site inspections, estimating approximately 20 additional personnel and $2.5 million in costs for enforcement.
• The District Attorney’s Office estimated a workload of 0.75 to 1.0 FTE for cannabis-related enforcement, while the Sheriff’s Department noted enforcement would fall under normal course activities.

Public Health and State Emergency Regulations

• Staff summarized findings from a Colorado workshop regarding increased youth cannabis use and the need for targeted prevention messages.
• The state’s emergency regulations were detailed, including THC limits for edibles, the creation of a delivery license, and requirements for licensed operators to sell exclusively within their supply chain.

State Temporary Licenses and Local Authorization Letters

• Staff presented a draft letter of local authorization for medical cannabis operators claiming legal non-conforming status to facilitate state temporary license applications.
• The Board directed staff to use an amended version of the letter that explicitly states the county does not currently have a process to adjudicate claims of legal non-conforming use status.

Transition Period and Response to State Applications

• Staff proposed a process for responding to state license applications during the transition period, recommending the county state that all applicants are legal non-conforming medical cannabis cultivators.
• The Board directed staff to implement the proposed transition period process, which includes a consultation mechanism for operators in the coastal zone or affected by pending ordinances.

Ballot Measure and Taxation Direction

• The Board reached consensus to place the tax measure on the June 2018 ballot and to tax medical and adult use cannabis at the same rate.
• Staff recommended a cumulative tax cap of 8% to ensure the total state and local tax does not exceed 30%, with the Board retaining authority to adjust the rate annually.
• The Board directed staff to prepare ballot measure language consistent with these parameters for review in January.

Closed Session

• The Board discussed existing litigation concerning the bankruptcy proceeding of Veneco in the U.S. Bankruptcy Court for the District of Delaware.
• The Board discussed a conference with real property negotiators concerning three parcels at 303 South C Street in Lompoc involving Lompoc Valley Medical Center and Lompoc Healthcare District.
• Staff reported that there were no reportable actions taken during the closed session.

Agenda Item: Cannabis Regulation, Licensing, and Taxation

Public Comment

• Public comment was received from stakeholders, including growers, the Cannabis Business Council, city representatives, and community groups.
• Licensing and Authorization: Speakers representing growers and the Cannabis Business Council requested that the Board direct staff to issue a "letter of local authorization" to allow existing operators to apply for temporary state licenses. Speakers noted that state regulations require temporary licenses by January 1 and that the current proposed letter may not satisfy state requirements without specific edits suggested by legal counsel to clarify that the letter does not create a vested right or entitlement to an annual license.
• Taxation: Multiple speakers expressed concern regarding proposed tax rates, specifically a 4% gross receipts tax on cultivation and a 6% tax on manufacturing/retail. Speakers argued that these rates, combined with state taxes and existing local taxes, would negatively impact business viability and consumer prices. Several speakers urged the Board to refrain from taking final action on tax rates at this meeting and instead direct staff to continue dialogue with the industry to reach a compromise.
• Opposition to Interim Licensing: The Mayor of Carpinteria and a representative for the City of Carpinteria urged the Board not to issue letters of authorization or provisional approvals prior to the adoption and effectuation of the county’s comprehensive Cannabis Land Use Ordinance. The City representative cited concerns regarding the verification of non-conforming status, potential conflicts with future Coastal Commission approvals, and the lack of environmental review for interim licensing strategies in the existing Environmental Impact Report (EIR).
• Industry Analysis and Economic Impact: A consultant provided an overview of the state regulatory framework and market data, highlighting that estimated statewide production significantly exceeds estimated legal consumption. The consultant noted that interest in cultivation licenses in Santa Barbara County exceeds the capacity of the entire state market. Recommendations included considering a single tax rate across all license types to accommodate vertical integration, keeping cumulative state and local taxes around 30%, and recognizing that manufacturing offers greater potential for job growth and innovation compared to cultivation.
• Enforcement and Compliance: Speakers discussed the costs of compliance, including odor mitigation systems. One speaker noted that state law requires illegal growers to pay three times the cost of a license, with penalties accumulating daily, and emphasized the need for local enforcement resources.
• Other Comments: A representative for COLAB raised concerns about the potential displacement of legacy agricultural industries and the unknown destination of tax revenues. A representative for the Santa Barbara County Taxpayers Association suggested that cost recovery should be the primary objective of any tax instrument. A farmer commented on the likely oversupply of cannabis, predicting price drops and market saturation.

Board Discussion

• The Board discussed the public comments and the staff report.
• Prevention Funding: A staff member clarified that the recommendation for prevention funds was based on anticipated state funding for behavioral wellness and local CATA efforts. The staff proposed allocating funds for a health education specialist to coordinate countywide prevention efforts, noting that the department would attempt to rearrange internal funds to support this.
• Tax Structure: The Board discussed the cumulative impact of taxes at different points in the supply chain (cultivation, distribution, retail). The consultant reiterated that a 2% tax at each point results in a 3% cumulative tax, while a 6% tax at each point results in a 9% cumulative tax. The Board considered the implications of vertical integration and the difficulty of separating tax bases for multi-licensed entities.
• Market Realities: The Board acknowledged the data presented regarding the disparity between production and consumption, noting that this would likely lead to lower prices and increased competition.

Motion and Vote

• Motion: To pass the item.
• Second: The motion was seconded.
• Vote Outcome: The motion passed by a vote of 4-1.

Agenda Item: Cannabis Taxation and Licensing Framework

Discussion

• Market and Pricing: Discussion included market pricing, noting that retail prices may drop significantly and that the consumer ultimately bears the cost of any tax. Arguments were made for a tax structure based on approximately 10% of the retail price and for meeting with industry representatives to determine a reasonable distribution of cultivation, manufacturing, and retail taxes.
• Tax Structure and Rates:
• Preferences were expressed for a fixed rate over a "not to exceed" rate to provide certainty, though a "four-fifths" vote requirement for rate adjustments was suggested as a compromise.
• A combined state and county tax cap of 30% was proposed to avoid driving the industry to other jurisdictions. Support was expressed for a "not to exceed" initial rate with the intention of finalizing specific rates after further discussion with stakeholders. A four-fifths vote requirement for any future rate increases was advocated to prevent the tax from being used to fill general budget shortfalls.
• The need for vertical integration to simplify enforcement and reduce the number of locations deputies must monitor was emphasized.
• Staff cautioned against discretionary annual rate adjustments, noting that such mechanisms could be legally challenged or require voter approval if not tied to objective factors like CPI or a stepped escalation schedule. Staff advised that the clearest legal approach is a set number or an initial rate that escalates to a set number.
• Staff clarified that for a general tax, ballot language cannot restrict funds to specific purposes, whereas a special tax can. The board discussed the trade-offs between general and special tax designations.
• Enforcement and Funding:
• It was noted that the county currently lacks sufficient funds for enforcement and that the proposed enforcement team would double the size of the current narcotics division.
• Staff presented estimates for licensing, permitting, and enforcement costs, noting that these are separate from behavioral health and public health costs, which are funded by state and federal grants.
• Public commenters argued that proposed tax rates are too high and would drive businesses to the black market or out of the county. They requested lower rates to remain competitive with neighboring counties.
• A representative for a community group requested that growers post bonds to cover enforcement costs and cited traffic safety concerns related to cannabis transport.

Motions and Decisions

• Direction on Tax Rate: The board discussed setting an initial "not to exceed" rate to allow for further negotiation with industry stakeholders.
• Rate Adjustment Method: The board considered requiring a four-fifths vote for any future adjustments to the tax rate.
• Tax Designation: The board discussed the distinction between general and special taxes, with staff recommending a general tax to avoid the higher threshold of a two-thirds majority vote, while acknowledging the board's desire to direct funds toward enforcement and public health.
• Next Steps: Staff indicated they would return in January with a draft ballot measure and fiscal impact statement, pending further direction from the board on the specific rate structure and whether the tax applies to unincorporated areas only or countywide.

Agenda Item: Letter to the State Regarding Cultivator Compliance

Discussion

• Purpose: The board discussed a letter to the state acknowledging the current status of cannabis cultivation in Santa Barbara County. The letter is intended to inform the state that the county does not currently have a process to adjudicate claims of legal non-conforming status under Article 10 by early 2018.
• Legal Context: Staff explained that the letter is not a license or permit but a communication of the county's current regulatory posture. Staff noted that the state’s emergency regulations became effective on December 7th, creating tension with the county’s existing Article 10 regulations.
• Vested Rights: Public commenters supported the letter, arguing it protects the county from vested right claims while allowing cultivators to maintain compliance with state law. They emphasized that without temporary state licenses, businesses face shutdown or black market activity.
• Wording: The board debated specific language. Staff suggested adding sentences to clarify that the state’s regulations are new and that the county lacks the adjudication process. A board member proposed modifying language to state that the county is "considering" a commercial cannabis ordinance rather than "focused on finalizing" it, to avoid implying a specific timeline or commitment.
• Affidavit: The board discussed attaching an affidavit to the letter, where operators would swear to their compliance claims. Staff noted that the affidavit is a claim by the operator, not an adjudication by the county.

Motions and Decisions

• Motion: A motion was made to direct staff to prepare the letter to the state, incorporating the suggested modifications regarding the county's lack of an adjudication process and the status of the ordinance.
• Second: The motion was seconded.
• Vote: The motion passed.
• CEQA: A separate motion was made to determine that the action is exempt from CEQA review under Section 15378(b)(5). This motion was seconded and passed.

Agenda Item: Closed Session

Discussion

• Veneco Bankruptcy: The board discussed existing litigation concerning the bankruptcy proceeding of Veneco in the U.S. Bankruptcy Court for the District of Delaware.
• Real Property Negotiations: The board discussed a conference with real property negotiators concerning three parcels at 303 South C Street in Lompoc, involving Lompoc Valley Medical Center and Lompoc Healthcare District.

Motions and Decisions

• Report: Staff reported that there were no reportable actions taken during the closed session.

Other Business

Discussion

• Moment of Silence: A request was made for a moment of silence for individuals who died in a car accident on Highway 154.
• Fire Update: Staff provided an update on the ongoing fire, noting that a Cal Fire engineer from San Diego was killed in the line of duty. Staff expressed condolences to the family.
• Public Comment: Several members of the public provided comments on the tax rates, enforcement, and the letter to the state. They generally supported the letter to the state but opposed the proposed tax rates as too high.

Agenda Item: Public Comment (Matters Not on Agenda)

• Discussion: A resident addressed the board regarding the physical and social environment of the county. She expressed concern about the presence of illegal operators in her area, contrasting this with the public face of the industry at meetings. She supported proposals for additional law enforcement positions and suggested that tax revenue should be used to fund cleanup of environmental damage left by bankrupt cultivators.

Agenda Item: Staff Report and Board Questions (Taxation, Ballot Measure, and Staffing)

• Discussion: A board member questioned the timeline for decisions on annual state licenses, noting that land use permitting components are still moving through the Planning Commission process. He asked for clarification on production versus consumption figures, noting that production estimates exceed anticipated consumption, and inquired about the destination of excess product.
• Discussion: A board member questioned the tax rate estimates and the number of licenses used for projections. He noted discrepancies between the estimates and the Environmental Impact Report (EIR) recommendations, specifically regarding manufacturing. He advised caution, stating that the numbers are estimates and the actual number of cultivators, retailers, and manufacturers is unknown.
• Discussion: A board member cautioned against expecting a tax windfall for the general fund, citing a previous conference where a Colorado representative stated that significant funds are required for mitigation and health/safety protections. He suggested that additional enforcement funds for cannabis should have been included in the list of financial challenges.
• Discussion: A board member inquired about the mechanism for tax collection based on gross receipts and how the Treasurer-Tax Collector would verify these amounts. He confirmed that the Treasurer-Tax Collector is aware of the verification process.
• Discussion: A board member questioned Public Health regarding the allocation of only one additional individual for the initiative. He asked why more staff were not needed for health education, monitoring, and epidemiology. Public Health indicated they would rearrange existing staff to allocate more toward the initiative, potentially impacting other areas.
• Discussion: A board member asked about Behavioral Wellness staffing. He noted that no additional staffing was requested by this department. A representative from Behavioral Wellness confirmed that no additional funds were requested at this point, though federal funds are specific to current initiatives and not necessarily future cannabis-related needs.
• Discussion: A board member clarified the nature of the "letter of authorization" for legal nonconforming uses. He stated that the letter is not an entitlement for a permit variance or building permit, consistent with the intent of Article 10. He expressed concern that the letter contradicts the previous ordinance process for legal nonconforming uses, which was abandoned in favor of this letter. He noted that constituents prefer certainty and that the letter's implications are unclear.
• Discussion: A board member requested more information on the transition period for annual non-temporary state licenses, specifically regarding staff consultation.
• Discussion: A board member argued for making a decision on taxation today to maintain the timeline for a June ballot measure. He stated that delaying the decision would delay the entire process and potentially reduce the tax structure. He emphasized the need to move forward thoughtfully given community concerns and the impact of the industry.
• Discussion: A board member discussed the tax structure options, including the 2-4-6 rate structure and the "not to exceed" cap. He opposed a "not to exceed" rate, applying a different rate to medical cannabis, or using an adjustable rate. He suggested a general tax with a sunset date and frequency of collection determined by the Treasurer-Tax Collector. He proposed incorporating a CPI adjustment into the ballot measure text.
• Discussion: A board member asked about vertical integration and its relation to zoning and the EIR. He noted that the EIR discussed vertical integration as a positive aspect.
• Discussion: A board member suggested that staff consult with Probation, Behavioral Wellness, Public Health, and other departments to refine cost proposals.
• Discussion: A board member expressed concern about ensuring funds are directed to law enforcement, public health, and behavioral wellness. She suggested a special tax to itemize impacts and ensure funds are used for specific purposes, rather than a general tax which might be diverted. She changed her preference to a special tax.
• Discussion: A board member asked about the affidavit required for the letter of authorization and suggested that Planning and Development (P&D) should be the point person for land-use issues. He questioned whether the affidavit incorporates the requirements of Article 10, such as nonprofit status and patient records.
• Discussion: A board member stated that the affidavit does not clearly indicate that the letter does not allow for other entitlements. He argued that providing the letter contradicts the intent of Article 10 and that the county should be consistent in its policy. He stated he would vote against moving forward with the letter.
• Discussion: A board member clarified that the letter is based on state regulations requiring a written statement indicating the local jurisdiction intended to grant permission for commercial cannabis activity. He maintained that this contradicts the intent of Article 10.
• Motion: A motion was made to proceed with the letter of authorization.
• Vote: The motion passed.

Agenda Item: Public Comment (Tax Issues)

• Discussion: The Chair outlined the key decisions for the day: tax structure, ballot measure, letter of authorization, and transition period. The EIR and land use issues were not on the agenda for decision.
• Discussion: Public commenters addressed the tax structure, emphasizing the need for a fair level playing field, support for local businesses, and a graduated rate structure. They discussed the importance of easy collection and minimizing burden on county staff.
• Discussion: Commenters suggested a total cumulative state and local tax target of 30% to remain competitive with other counties. They discussed the implications of vertical integration and the need for clarity on accounting practices.
• Discussion: Commenters emphasized the need for the board to understand the industry's accounting and to ensure the tax structure supports local businesses.

Agenda Item: Board Deliberations (Tax Rates and Ballot Measure)

• Discussion: The Chair proposed discussing tax rates, the ballot measure, and temporary permits/letter of authorization separately.
• Discussion: The board discussed general principles for the tax structure, including ease of collection, fairness, competitiveness, and support for local businesses.
• Discussion: A board member suggested a graduated rate starting low and increasing over time. She opposed a "not to exceed" cap and a different rate for medical cannabis.
• Discussion: A board member emphasized the need for a fair level playing field and competitiveness with other counties. He suggested a 30% total cumulative tax target.
• Discussion: A board member discussed the method of adjusting the tax rate, suggesting a CPI adjustment built into the ballot measure. He opposed a sunset date.
• Discussion: The board discussed the frequency of tax collection, balancing the need for timely revenue with ease of administration. They considered semi-annual or annual collection.
• Discussion: The board discussed the scope of the tax, considering unincorporated areas versus countywide. They discussed the difference between a general tax and a special tax, noting that a general tax requires a four-fifths vote while a special tax requires a majority vote.
• Discussion: A board member suggested a special tax to ensure funds are directed to specific impacts, such as licensing, permitting, administration, addiction, education, and public safety.
• Discussion: The board discussed vertical integration and its impact on tax rates. They agreed that the tax should not layer or accumulate in a way that disadvantages vertically integrated businesses.
• Discussion: The board discussed the timing of the ballot measure, aiming for a June election. They discussed the need to provide direction to staff to develop the ballot measure.
• Discussion: The board discussed the contingency of the licensing and permitting program on the passage of the tax. A board member stated that he would not support the program if the tax did not pass. The board agreed to make the long-term life of the program dependent on the passage of the tax.
• Motion: A motion was made to provide direction to staff to develop a ballot measure for cannabis taxation based on the discussed principles.
• Vote: The motion passed.

Agenda Item: Temporary Permits and Letter of Authorization

• Discussion: The board discussed the letter of authorization for temporary cannabis operations. A board member suggested that the letter should state its purpose, create context around Section 35-1003, explain the January 19, 2016 date, and inform the state about the county's impending development of regulations.
• Discussion: A board member supported providing the letter with the suggested contextual language.
• Discussion: The board discussed the need for the letter to be reviewed by Planning and Development.
• Motion: A motion was made to adopt the letter of authorization with the suggested contextual language.
• Vote: The motion passed.

Agenda Item: Adjournment

• Discussion: The Chair announced that the next meeting would be on January 9.
• Discussion: The CEO provided a fire update and shared sad news.
• Motion: A motion was made to adjourn the meeting until January 9.
• Vote: The motion passed.

Agenda Item: Cannabis Banking and Financial Compliance

• Staff presented information regarding Financial Crimes Enforcement Network (FinCEN) guidance for financial institutions serving cannabis businesses, noting industry reports of monthly compliance costs ranging from $5,000 to $7,000. The State Treasurer’s Cannabis Banking Working Group report was discussed, identifying four critical steps: implementing efficient cash payment handling, creating a compliance data portal (with a Joint Powers Authority currently in discussions to collect statewide financial data), conducting a feasibility study for a public or state-chartered bank, and establishing a multi-state consortium to pursue federal law changes. Staff noted that a public bank would require a Federal Reserve number to function beyond state/county deposits.

Agenda Item: Licensing, Staffing, and Enforcement Estimates

• Staff outlined the requirements for a county business licensing program, including one-year non-transferable licenses, defined premises, fingerprinting, background checks, site inspections, and tax payment verification. A due process section for license revocation or denial is being developed. Staff estimated that approximately 20 additional personnel and $2.5 million in costs would be required for licensing and compliance enforcement. The District Attorney’s Office provided a general workload estimate of 0.75 to 1.0 FTE for cannabis-related enforcement. The Sheriff’s Department indicated that enforcement would fall under normal course activities, though additional staffing for a dedicated unit was discussed in later public comment.

Agenda Item: Public Health and State Emergency Regulations

• Staff summarized findings from a workshop with Colorado public health officials, noting increased high school youth cannabis use, a rise in emergency department visits among tourists, and the need for targeted prevention messages. Staff reported that the state published emergency regulations on November 16, 2017, which included:
• No limit on the number of licenses an individual can purchase, subject to anti-concentration rules.
• Clear definition of cultivation site premises.
• Creation of a new Type 9 delivery license.
• THC limits of 100 mg per package for edibles and 2,000 mg for other manufactured products.
• Establishment of fees and fines.
• Definition of "commercial cannabis activity."
• Requirement for licensed operators to sell exclusively within their supply chain (medical or adult use), with a grace period until July 1, 2018, allowing cross-chain sales.

Agenda Item: State Temporary Licenses and Local Authorization Letters

• Staff presented a draft letter of local authorization for medical cannabis operators claiming legal non-conforming status under County Code Article X. The letter would state that the operator’s claim of compliance has not been adjudicated by the county. Staff proposed that the board direct staff to issue this letter to facilitate state temporary license applications.
• Motion: A board member moved to direct staff to use an amended version of the letter, incorporating language stating that the county does not currently have a process to adjudicate claims of legal non-conforming use status.
• Second: The motion was seconded.
• Decision: The board directed staff to use the amended letter.

Agenda Item: Transition Period and Response to State Applications

• Staff proposed a process for responding to state license applications during the transition period (January 1, 2018, until local ordinances are effective). Staff recommended that the county respond to the state within 60 days, stating that all applicants are legal non-conforming medical cannabis cultivators, which would result in the denial of their state applications. For operators in the coastal zone or those affected by pending ordinances, staff proposed a consultation process where the county would remain silent to the state (allowing state license approval) as long as the operator actively participates in meeting local requirements. Failure to participate could result in a notification of non-compliance to the state.
• Motion: Staff requested board direction to implement this transition period plan.
• Decision: The board directed staff to implement the proposed transition period process.

Agenda Item: Ballot Measure and Taxation Direction

• Staff presented a decision matrix for the board to provide direction on the June 2018 ballot measure regarding cannabis taxation. Key discussion points included:
• Ballot Timing: Consensus was reached to place the measure on the June 2018 ballot.
• Tax Rate Structure: Discussion centered on whether to set a fixed rate or a "not-to-exceed" (maximum) rate. Staff recommended a cumulative cap of 8% to ensure the total state and local tax does not exceed 30%.
• Rate Adjustments: The board discussed the need for a mechanism to adjust the tax rate annually based on market conditions and revenue needs.
• Medical vs. Adult Use: Consensus was reached to tax medical and adult use cannabis at the same rate.
• Vertical Integration: Discussion occurred regarding how to tax vertically integrated businesses to avoid cumulative taxation on multiple steps of the supply chain.
• Sunset Clause: Consensus was reached that no sunset clause should be included.
• Contingency: Consensus was reached that cannabis regulations should be contingent on the passage of the tax measure.
• Motion: A board member moved to direct staff to return in January with ballot measure language for the June 2018 election, specifying a tax rate not to exceed 8%, with the Board of Supervisors retaining the authority to adjust the rate annually.
• Second: The motion was seconded.
• Decision: The board directed staff to prepare ballot measure language consistent with these parameters for review in January.

Agenda Item: Public Comment

• Public comments were received from residents and industry representatives.
• Resident: Expressed concerns about fire safety, water usage, and lack of enforcement in rural residential areas. Requested that growers be required to obtain conditional use permits with neighbor notification and appeal rights.
• School Representative: Opposed cannabis cultivation in the Carpinteria Valley, citing threats to the school and community. Requested that interim licensing processes ensure thorough mitigation of impacts, similar to the conditional use permit process the school underwent.
• Cultivator: Argued that high tax rates would drive the market to illegality, citing Washington State data. Requested support for vertical integration and lower tax rates to ensure the viability of small businesses.
• Cultivator: Stated that large-scale operations in other counties would compete for market share. Requested competitive tax rates and reduced government overhead to retain local revenue.
• Sheriff’s Department Representative: Clarified that the current narcotics unit handles various drugs and that additional staffing would be required for cannabis licensing, compliance, and illegal grow enforcement. Noted that federal funding currently covers some overtime for National Forest enforcement but no other specific cannabis funding has been identified.
• Cultivator: Requested the issuance of local authorization letters to apply for state temporary licenses. Opposed the proposed tax rates as unsustainable for small family farms. Requested more time to negotiate tax rates.
• Cultivator: Argued that proposed tax rates would require significant production increases to break even. Requested an aggregate, sustainable tax cap and support for small farmers seeking to operate legally.

Public Comment

• Three members of the public addressed the board regarding cannabis regulation, taxation, and local economic impacts.
• First Speaker: Noted that 2018–19 expenses totaled $4.3 million, with no allocated funds for social services or education for youth and pregnant/nursing women. Cited a report indicating an increase in the homeless population in Colorado. Recommended that any new tax be implemented in April to expedite revenue collection. Asked whether countywide taxes would allow cities to receive a portion of the revenue or if it would apply only to unincorporated areas. Recommended passing a general purpose tax but delaying the permitting process until rules are established to avoid negative impacts on industry operations. Stated that outdoor cultivation, including hoop houses and shade structures, should be prohibited to address odor concerns associated with greenhouses.
• Second Speaker: Expressed opposition to Agenda Item A, stating that the board lacks sufficient understanding of industry economics to determine an appropriate tax structure. Recommended that the board refrain from taking a final vote on the matter, instead gathering additional data and models before making decisions on regulation and taxation.
• Third Speaker: Requested that the county issue compliance letters to current operators as soon as possible. Referenced a previous letter from the City of Carpinteria that had praised greenhouse owners for their financial contributions and for helping maintain the city’s small-town character by preventing large box stores from moving in. Noted that current greenhouse operations employ local residents, many of whom are graduates of Santa Barbara City College, and that their spending supports local businesses. Stated that there has been no increase in crime in rural areas of Carpinteria over the past two years and that cannabis cultivation does not use more water than cut flower cultivation.