Board of Supervisors — 2017-12-14

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Good morning, could everyone take a seat and we'll get started today. Welcome to this December 14th special meeting of the Santa Barbara County Board of Supervisors here in the Santa Barbara Hearing Room. Would you call the roll Mr. Allen?

Ms. Wolfe, Mr. Adam, Mr. Lavinino, Mr Williams, Ms. Hartman.

a friend to many in this room. He had been before our board a number of times. Unfortunately he lost his life in a tragic car accident on Highway 154 after returning from our November 14th meeting leaves behind his wife Bobby and two small children Johnny and Mika, three and one. Also lost in that same accident was Jorgen Stufkoski who also was a married man in his 30's with two children so if we could have a moment of silence.

Thank you Madam Chair.

Thank you. I'd like to talk a little bit about today's public comment. There will be an opportunity in a moment for public comment on matters not on today's agenda, then we will go and have a staff report and board questions and then we will have a first public comment focusing on tax issues and that every speaker will be allowed two minutes and then we will later have a public comment addressing the rest of the issues. So people will be allowed two minutes and then another two minutes in the second public comment. Unfortunately, we didn't ask you when you submitted your slips so what we may do is have people line up and then announce your name and we'll pull the slip as you come.

So with that Mr. Allen do we have any public comments slips not addressing today's agenda on cannabis?

Chair Harmon, members of the board we have no request to speak under general public comment.

Thank you okay then we're turning to Mr. Bozanich and the presentation

Chair Hartman, members of the board thank you for this opportunity. So to build upon and kind of show it graphically here's a proposed road map for the day today. So the chair in conversations with the chair she asked that we go through the entire presentation. It's total of 30 slides most of those slides are divider pages so it's about 20 slides of content But it does give a full context to various decisions we're going to ask the board to consider later on today.

After going through the entire presentation, we'll do a recap on the presentation on the economic and tax revenue analysis taxation structure ballot measure and staffing options which if you look at the board letter are connected with recommendations A, B and D And we'd like to then do public comment on that portion of the agenda letter today. So as the chair just mentioned around taxation, ballot measure and staffing options.

And then ask the board if they would consider at that time doing while it's fresh, public comment is fresh, ask them to do board deliberations and then possible motions to receive and provide possibly direction to staff on their recommendations listed above. Then we would come back and recap very briefly the presentation on responding to temporary and annual state licenses, again have a second public comment period on those particular issues as well as any of the receive and file issues that are also part of the staff's Board of Supervisors meeting opportunity to proceed today and with that I'd like to go ahead and kick it off. These are those recommendations, I will not go through them in the interest of time they are reflective of what's on the board letter but I'll just make note that we are asking specifically for the Board to provide direction to staff about developing a ballot measure possibly for cannabis taxation based on the information you're going to receive today from our HDL consultant, Mark Lovelace who I'll introduce in just a moment.

And then also provide direction to staff around the state licenses both the temporary licenses as well as the annual licenses that we discussed prior at a prior meeting, the November 14th meeting. So at this time, what I'd like to do is introduce to you Mark Lovelace. Mark is a former Humboldt County Supervisor for two terms. He also has worked prior to that as the Executive Director and President of the I want to welcome Mark to our federally declared disaster area and provide him a safety mask for today. He doesn't have to wear it during the presentation, but he may be helpful on the way out of the building.

He's also, just to mention too, he's got a Bachelor of Science degree in Industrial Design from San Jose State University. And so with that I'd like to turn it over to Mark.

Just one moment. Supervisor Wolf has a question or comment? Thank you Madam Chair. Sorry to interrupt you Mark. It's nice to see you here. Dennis can we go back to the recommendations just so I'm clear. Did you say that today we're going to make a decision on the annual state licenses or we're just going to be discussing that? Because as I understand it has to go to the Planning Commission.

Chair Hartman, Supervisor Wolf. You are correct this is about the state licenses just during that transition period because you are absolutely correct the land use permitting components are still moving through the planning commission process and will come to your board on hopefully February 6th but this is just direction to staff about what to say to the state during that transition period of roughly January 1st Good morning. As noted, I'm Mark Lovelace with HDL Companies.

In my time prior to working with HDL when I was on the Board of Supervisors for Humboldt County, I also worked with CSAC to establish their medical marijuana working group back in 2010. And so much has happened since then. At that point it was an issue that a lot of people were still comfortable saying let's just not talk about it and it will go away. As you're well aware we can't not talk about it at this point.

So I want to give you just a very brief background on the status of the industry and the state regulations affecting it at this point, and also the scale of the industry in terms of what you might expect to see as this industry comes out of the shadows, as the terminology has been. And as we normalize it and turn it into an industry that operates like any other legal industry in California.

Which one do I want here? There we go. Okay, so real briefly as I'm sure you're all aware Proposition 64 passed just over a year ago the Adult Use of Marijuana Act and then more recently in the middle of summer back in June the state legislature passed and the governor approved SB 94 which combined I want to start by recognizing the adult use of marijuana act with the existing medical cannabis regulation safety act to form the wonderfully named malcursive medical and Following that there was an addendum to that AB 133 was approved in September which allows for multiple licenses on a single premises and has some other impacts upon some of the vertical integration aspects of the industry.

And most recently, less than a month ago on the 16th, the three licensing agencies, the Department of Food and Agriculture, the Department of Public Health and the Bureau of Cannabis Control whose name has changed like four or five times in its one year existence. emergency regulations. And so as your board is taking this up at this point, it's a very good time because for the first time we have fully drafted regulations at the state level for your local program to integrate with. So even though there are numerous counties and cities that jumped into things earlier on in the process, everyone is going to have to go back now and make sure that what they have is consistent with this whole state framework that hasn't existed until now.

So the size of this industry, there can be a lot of concern in looking at this that this industry is going to overwhelm our communities. It is a new industry and it is a large industry and of course there's some places like in Humboldt where we've been dealing with it as a very large part of our community for decades. But the there have been some good figures that have come out in the past year as a part of these developing regulations. And one of those is a huge difference between the amount of production in As part of their regulatory impact assessment for the regulations, they came up with a figure of 13.5 million pounds per year as the estimated amount of cannabis production in the state and they note that that's only the amount that they can detect.

Anything that's flying completely under the radar that's not being picked up by Google Earth searches, by people trying to enter the permit stream or through enforcement would be additional on top of that. But then based on other sources that look at statewide cannabis consumption, it came up with a figure of 2.5 million pounds. So the amount of production in the state, the identified amount of production is already about five times greater than the size of the legal market. There's some additional modifications that can be made to that, that are in the report that we provided to you. That when you consider that a portion of that market is still going to, of the legal market in California, it's still going to be fed through people just buying it from someone they know or through the black market.

That 2.5 million pounds comes down even further. Additionally, there was a separate study that was done called the California Cannabis Opportunity Report that came up with figure of only 1.6 million pounds of cannabis for the amount of consumption in the state. So then if we look at the number of licenses, anticipated licenses. Who wants to get in on this business? The Department of Food and Agriculture in August 2016 published the results of an online survey that they did and this was not authoritative in any way it was just saying hey if you think that you might be wanting to pursue any of the license types in state I'm going to give you a little bit of background on this. It's not considered, you know, statistically The survey that was done, we came up with a figure of 14,277 cultivation licenses that were being sought statewide and using some standardized productivity figures they would be able to produce potentially 30-40 million pounds of cannabis.

Supervisor Wolf has a question for you. Yes thank you Mark so I'm just trying to reconcile these two slides this one says that there is a potential to produce 30 to 40 million pounds but But the consumption is much less. The anticipated consumption is much less?

Yes.

So, you know as we talk about bringing this industry out of the shadows it seems to me that there will still be a lot in the shadows because there's more being produced than will be consumed so one has to ask where is that going? Is it going over state lines? What is happening to that additional production?

Yeah, the excess is presumably going over state lines. Not all of it is being successfully tracked but we're well aware that there's a lot of cannabis produced in California that's feeding those states that don't have some form of legal access and also going around the world.

Supervisor Adams? Thank you.

If there's any law enforcement that works, and maybe there's not really in the broad sense because it's been going on here as a black market industry for umpteen years. You can't I mean I would not think that you would be able to produce 30 million pounds And dispose of the balance of whatever we don't consume here, whether it's less than 3 million pounds. So 27 million pounds is gonna find its way out of this state and the stuff that is sold in this state is gonna drop precipitously in price And there's going to be a whole bunch of these legal guys that go broke.

You know, this is Wally World economically. This is not going to work.

And that's exactly the point, is that there's far more interest in people that want to come into this industry than the market can possibly support.

Right.

This is a gold rush mentality. Yeah. As someone who was until very recently a part of government and is now outside of it, I recognize that very often we feel the brunt of people's frustrations about the difficulties they're having with their business. The effect that we will have on this industry through regulations and taxes is nothing compared to the effect that the limits of the free market are going to have on this industry. That is going to be the single biggest limiting factor for anyone who wants to get involved in this, and with so many people seeking to be a part especially in the cultivation sector it is going to force prices to plummet, margins are going to have to be razor thin And it's very likely the people that are going to succeed are the ones that have some sort of financing that will allow them to basically lose money for a period of years until their competition has thinned out significantly.

Those free market factors are going to be far more difficult for people to overcome than the regulatory constraints that they'll find in their way. Right.

Thank you.

So just to continue, yeah these figures are as noted they're way off the charts far above the size of the market. So when we look at Santa Barbara in particular, that same CDFA survey only identified 200 people in that survey that were seeking cultivation licenses in Santa Barbara. But now that the county has its registry, we know that there's around 500 entrants in that registry for cultivation seeking potentially 1,365 separate licenses.

And again, running those through some standard productivity figures based upon the license type and the square footage and yield. They could potentially produce 3.7 million pounds which would be more than twice what the entire state of California consumes through its legal market. So we all have to have a much more realistic perspective on what the size of this industry is going to be not just in Santa Barbara but throughout the state.

So some takeaways

from that. I have a question there. While we're talking about the size of the market, I didn't see anywhere in here where...I'm kind of curious and maybe that this study took this into account but so you have an illegal product that somebody like myself, I'm not going to be interested in it. There's millions of people my age in the state of California that if it became legal I might go.

So when you're talking about how many pounds are being used right now, is that study inclusive of who they think might be interested in the product later?

So much more I could have put into this, but I was asked to just provide a little brief opening to kind of help frame up some of these things. The same studies that were done for each of the licensing agencies had to do their standardized regulatory impact assessment and There's really interesting tidbits in each of those and one of them that I believe is in the CDFA You know when adult use recreational cannabis is legal that they anticipate a very modest 9.4% increase in consumption, which is not a lot and essentially.

Cannabis is it's very easy to get one's hands on it and there's very few people in the state of California. It's believed that are you know, with that easy access are saying I'm not going to experiment with it or don't have any interest in it. But now that's legal, hey, I'll give it a try.

One other question is on usage do we know what? I know it's illegal for a grower at this point to send something across state lines but do we have any idea what the market of like the United States would be?

At this point there's 26 states that allow some form of legal cannabis use, mostly medical more increasingly in the adult use realm. And those states amount for over 60% of the US population that has some form of legal access to cannabis. with more every year, every election cycle looking at this issue. At what point will the dam burst and will federal prohibition come down? That's certainly not likely to be seen under the current administration and it's a difficult guess to make.

But just to add another factor to all of this, from one of these studies they determined that there'd be a modest 9.4% increase in consumption through adult use legalization and then along with that a lot of people are going to say well I no longer need to bother with having a doctor's recommendation. I can just go into a store and buy this including both people don't have what you or I might commonly believe is a valid medical reason, but also people that do have a valid medical reason that are just saying, why am I going to pay $200 for a doctor's visit and getting my state-issued card just to save a little bit on sales tax?

So they believe that around 65%, I believe it is of the market will end up in the adult use market. About 9% of that will remain And that leaves a remainder of 26 and a half percent, I believe is the figure. I don't have in front of me that they believe will continue to be fed by the black market people that just aren't going to bother going to the store because they're either growing their own or they got a buddy or something of that sort. So when you look at that 2.5 million figure, that 1.6 million figure, whichever one of those you want to believe is more accurate, Supervisor Adams.

I am a farmer. I don't know if you know it or not, but I am a farmer vegetables and I know that farmers the first thing they're going to do every single time is overproduce And this is gonna be no different than anything else any other agricultural commodity They every single time they get over produced and when they get over produced The price plummets far beyond beneath the cost of production and It takes some time especially To the extent that the oils involved here are not perishable.

If I wasn't dealing in perishable commodities, that's the only thing that saves us in the veg industry. Because next week that stuff is gone anyway. If you turn all this stuff into oil it will be out there forever and that 30 million pounds could take 10 years to work out and when the supply finally falls If it's below consumption levels, then you can start entering back into the market again. But there is going to be an extended period I predict of really low markets on these things.

And I would agree and we're already seeing that. There are people in Humboldt County that are used to selling their product for $1,500 or $2,000 a pound I'm confident that they have a good reputation for high quality product and that are struggling to move their product at 500 right

now.

So it's going to be a buyer's market, and that's gonna be frankly bad news for the cultivators. They're gonna be The bottom end of this market that everyone else is going to be looking at, you know how cheap can I buy product for and then how much can I add value to it through manufacturing or through other things. Yeah, to boost that. There is one positive for the cultivators though which is the regulation and particularly the testing and labeling requirements are already starting to show an impact in terms of buyers being able to know the quality of the product and being willing to pay for higher quality product now that it's not just someone saying oh this is good stuff You know, they can look at a label and they can see here's the testing results.

Here's the THC content, the CBDs. Here is, you know, didn't have any impurities or whatever else. And yeah, they can be assured of, you know, the quality of product that they're buying and that seeing the top end of the market actually move up. So there'll be much like with wines, there will be room for a lot of price stratification in this industry but the bulk of the product is probably going to be continuing to move down.

And the black market stuff that can't guarantee the cleanliness and the food safety kind of aspect of it is going to always come at a discount. And so, it's going to further suppress their production because those guys are going to go broke too. They're not magic.

And it's assumed that there is a risk premium that people consider when they're determining whether they want to buy from some guy they know or their dealer, whatever. Or whether they want to walk into a store and buy illegally. And the stigma of buying stuff from the black market and the unknowns as far as the quality and the legal risk associated with it. It's believed that the ease of access through legal means is going to be a huge limiting factor on the black market that will over time, you know it's not gonna happen overnight when you've got 13.5 million pounds being produced in the state, it will take time but it is going to have an impact on the slow decline of black market.

Thanks. A little functional note here, I'm having trouble hearing. I don't know if anybody else is and I think it's the fans.

Mr. Lovelace something with the mic or how close you are would

help me much better. But if you can crank it up Mr. Allen

that'd be great. Okay, so just a few takeaways on that. As noted the current cultivation exceeds the size of the legal market by five to eight times. Statewide interest in legal cultivation exceeds the size of the legal market by 12 to 16 times and when we look at again these standardized production figures and how many cycles per year can be achieved off of say indoor cultivation it's conceivable That California's entire market could be supplied by as few as 200 type 3A medium indoor grows.

Conceivable but not likely, we imagine that there is going to be a lot of stratification, that there will be some much larger growers and a lot of smaller ones. But you might have heard some of the discussion recently about whether or not there would be a one acre cap on cultivation at the state level That definitely has an impact on this figure here because the more people that are allowed to grow up to 4, 10, 20 acres as the type 5 licenses may come online in 23, that's going to eat into the amount of market that's remaining for the small type 1 and 2 cultivators.

Then the last note is that interest in cultivation licenses just in Santa Barbara far exceeds the capacity of the entire state market. These are some of the tables that were provided in your, in the report that are more in here for reference if they come up for discussion later on but we considered a number, these actually have some different rates I think than were through our figures of 2%, 4% or 6% for some of the different activities. And so we put those into tables so that we can see for you how much revenue could be generated and in this case, we're only looking at 10% of the county registry.

The report provided 10, 20, 30 and 40% of that registry as numbers to look at but 10% is a good one because if you think it might be 20, And then we have the same thing for the commercial manufacturers and the retailers. And as noted in the report, manufacturers are an area where there's a lot of opportunity for growth in this industry. Cultivation is going to be pinched by the limits of the market but manufacturing is an area where there's lots of room for innovation and room for more jobs and more technical jobs.

Thank you, Mr. Chair and members of the public. I have a couple of recommendations for this industry and still some unknowns too. So it would be a recommendation to perhaps be gentle with what you do with the manufacturing sector because that's where you may have the greatest opportunity for jobs, innovation and economic development from this industry. And retailers as noted are pretty much limited by At some point, more retailers will simply cannibalize sales from existing ones. So there's kind of a limit to how many any community can absorb.

So lastly our recommendations that we would offer would be that recent changes to vertical integration through all of those things in the first slide In the past, HDL has pretty consistently recommended counties and cities go with a square footage tax on cultivation. But vertical integration right through to that last one of AB 133 This allows that a cultivator might also be their own distributor. A cultivator might also manufacture their product.

There's still some inconsistencies between the existing regulations and the co-location of different license types that's allowed under AB 133, but ultimately If you have a single business that is operating multiple activities, both cultivation and manufacturing, and you have one tax mechanism or one tax rate on one part of the business and a different one on the other, it might be difficult to tease out the separate operations for purposes of how you assess that tax.

You're a cannabis business, you're doing a number of activities and you fall into a 6% tax category or 4%, whichever that is. That becomes a much simpler approach at this point. The local taxes, we've been recommending to clients that they work to keep the cumulative state and local taxes at around 30%. And there's a table and a discussion within the report that goes out how you get that. The taxes are assessed at different places along the food chain so it's, yeah, the price at cultivation is very small relative to the price at the end retail.

So you have to figure out what the price of the product is each place along the way and how that affects it. But looking at the figures that we've generated, a tax rate of 2% across the board, we believe could generate around $8 million in revenue for the county. Tax support percent would obviously double that to around 16 million. A tax rate of 6% could generate perhaps $24 million for the county.

Can you tell us, do we know how much the state is taxing? What percentage?

Yes, the state has two different taxes that they assess on cannabis. A cultivation tax of $9.25 per ounce of dried flower and $2.75 per ounce of dried leaf. And that is a price that's independent or a tax that's independent of the price paid and so it's very sensitive to the price paid. In the report where we have that table of the cumulative price, we're assuming $1,000 a pound as a very general price.

And at that, let's see, give me just a minute here. If we back out and leave out any local tax, just the $9.25 tax on flour If the price drops down to $500 as we've been considering, it boosts the relative impact of that tax up to 40% of the product at that point in the process. Again, the price is low at that point and will continue to increase as it goes through manufacturers and distributors So the impact of that gets a little bit muted by the time you get to selling it at $12 a gram type price.

But it still does have an impact, especially on the cultivation community where it's huge.

Supervisor Williams?

I don't follow this. What is the market price right now?

On cultivation, at the cultivation end it's I think the last spot price I saw in California was around $1200 but that's moved down significantly from I think $1600 just earlier this year. And it moves around over the course of the year and the source for that data you know I've heard some people in the industry Don't give that source a lot of credibility. And then when you talk to a lot of individual growers, they'll say well that's fine but I'm as noted but I'm having trouble finding someone who will buy my product at $500 a pound and I'm having to sit on it and hope that the market is going to change a few months from now while my products still good before it becomes useless.

There's some disagreement on what the average price might be, but there is a broad agreement that it is headed down.

Supervisor Adam and then Wolf.

And anecdotally I was told last week by a carpentry grower on a tour down there at one of the facilities which was beautiful by the way that he was selling for $500.

Supervisor Wolf. Thank you, Mark I just need some help understanding the tax rate estimates the 2%, 4% and

6%.

So I guess let's just go back to the slide where you talk about cannabis dispensaries retailers and there's different options there 3, 6, 9, 12 of the number of licenses. So which one did you pick? What is the most likely one that you picked to come up with your estimate

for the estimates I provided in this report here? We kept it at 10% because that's the one that is the most top heavy in terms of, you know, the speculative end of it of how many people are looking to get in there. But manufacturers, the belief around manufacturing which is discussed in there right now, it's estimated And how that might change as the industry changes over time is anybody's guess.

But with a thousand manufacturers, how you figure where they're going to locate is the difficult piece. With cultivation it's a land-based activity and so there's a history of the activity in certain parts of the state and so we can get good estimates of where the industry is based upon that. With retailers, it's population-based. People are only going to drive so far to buy the product.

But manufacturers don't have to live near their source. They can buy source from anywhere in the state. There's people in Humboldt County that are selling product to people down in Los Angeles or the Inland Empire that are modifying it and moving it to market. So manufacturers have the ability to locate based upon favorable regulatory and taxation climate and cultural climate.

And we believe that what we're likely to see is that of those thousand manufacturers, they're probably going to mostly coalesce around certain hubs in the state. Those hubs will be places where there is an abundance of product, where there's a cultural mood of acceptance for this industry And where there's a broader support network for the industry. As anyone that's ever been in the private sector knows, no business exists by itself. Every business depends upon a whole variety of other businesses to support them and this industry is no different.

Places that have an abundance of this industry will likely be a better place to locate, even though it means perhaps more competition in one sense. It also means that you have more suppliers for all of the different things that your business needs. More technical support for the manufacturing sector has a lot of highly technical equipment that needs to be maintained and tested So just to put all of this in context, because I think when we look at these tax rates and these millions of dollars it looks very appealing.

One of the problems that I see is that these numbers don't necessarily match with what our EIR is recommending. And so, you know just specifically manufacturing so it's much less than the 10 then that what you used as an estimate. So I think we just as we move forward on this In my opinion, we need to be cautious that what this is all based on is just simply an estimate because we don't really know at this time how many of these cultivators retailers manufacturers are actually going to be in Santa Barbara.

And that's a very good point. And I would encourage all of you to think of this, don't start with the taxes and with the figure that you want to achieve as your goal. There are still strongly held values around this industry, around this product. So we have more of a cultural conversation within our communities about how we want to deal with it. Jumped right in and said, you know, hey let's let's do it. You know where we're good with this And there's other places that are having a more difficult time wrapping their heads around the changes that have happened with this over time So you really do have the opportunity to think about?

You know how much you do want to embrace this industry And what you would like this industry to look like in your county In the near future

supervisor Lavinino

Thank you Madam Chair and I think we have been having, we've had many meetings so far already and so I think we're hearing from the community of what level they are comfortable with. When I look at these numbers and the usage that you brought up in these things and I think it's very important for us to look at that At the same time, I don't think we're not asking the county to invest in any of these businesses.

There's definitely gonna be winners and there's gonna be losers but at the end of the day, there is gonna be an industry. And so I'm not here to say we're gonna be overproducing that's what the market will bear. And if 100 people wanna line up to do it and 10 of them succeed I mean, I'm still going to collect the tax from those 10. So that's what I'm looking at. Number two is just to put things into perspective with the numbers that you put up even at 2, 4 and 6.

And if you look at what the top 10 taxpayers in the state, I mean in Santa Barbara County are putting in, if you take our top 10 assessment comes out to 2.1 billion, which is really $25 million a year in property tax, which is really about $10 million to the general fund. So this one industry as small as it might be as we try to pare it down still could generate as much general fund revenue As our top 10 right now which includes Exxon, Edison, the gas company, Biltmore, the Bacara, Winsett Farms, PG&E.

So I understand I'm not getting super excited about and trying to count our chickens before they're hatched Because I know there's a lot more that goes into this than just looking at the revenue side. But the revenue side is why I'm interested in it as well, because if we were sitting in the black right now with a big hefty surplus, I might be a little bit more hesitant to be talking about this than I am when we're in the financial straits that we're in. So it's all part of a bigger picture and I appreciate you kind of painting that statewide.

It's been very helpful and educational.

Supervisor Williams?

You guys look at also that, I mean that point that Supervisor Lavagnino brings up is brings me to this question. Do you look at the relationship in property tax and what that conceivably would mean for the property tax element of revenue?

We haven't looked at that through HDL, but I can tell you in my Former role on the Humboldt County Board of Supervisors. That was a huge issue we saw In the recent years as this industry was You know coming further and further out of the shadows And as we got a regulatory framework and started getting permitting a lot of real estate speculation and Obviously, you know when a piece of property sells and that changes its assessed value.

And there were stories that were published of people who had been in the real estate industry for decades up in Humboldt County that were having someone come to them and say I want to sell my property And the realtor would say, okay it's a small piece of dirt out in the hills. You know unimproved anything like that we think is probably going to be around $125,000 and the person said put it on the market for a million. And the realtor would say I don't think so they put her on the market for a million and it would sell the next day at a million dollars because they had a permit I don't think that you would have quite the same It's going to be different in each community and it's going to be a big difference based upon whether you have an existing industry that's looking to, as in Humboldt, an existing industry that's looking to emerge and become legal or whether you're looking at a new industry that's starting to move in or something between the two.

Each community is going to be a little bit different.

I appreciate you saying that because this board often has debates about oil and oil revenue. I've looked up how much property tax do we get from oil? What's curious is that we actually get far more property tax from greenhouses and cut flower than we do from oil. We also have, get more property tax from vineyards than we do from oil and the you know Empty greenhouses produce a lot less property tax than full green houses. So, I mean that is another element of this that you know I don't think we have analyzed here but should be significant.

That brings up the issue of driving out fruits and vegetables for cannabis. Supervisor Wolf?

I can't let that pass. In Carpinteria, unfortunately we just have vast acres of completely empty greenhouses which is sad but it's because of bad trade policies not because of what we're doing here at a local level.

Right. But we have to think about the impacts on the county

as a whole. Supervisor Wolf? Thank you Madam Chair. We can't get overly excited about the potential of taxes that might go to our general fund. As we're going to be seeing later in this presentation, the amount of money that we're going to be needing to spend to kind of mitigate some of the aspects of this industry. You know, Staff put on a conference where we heard from someone from Colorado who essentially said that don't expect a windfall of these taxes and funds to go into your general fund because in order to make this a process that protects the health and safety of your community, a lot of the money is going to have to go into as we're going to see later. First of all, that land speculation was fueled and predicated by $2,000 a pound material.

And it's not like that anymore. So I don't think you'll ever see that again in the foreseeable future and probably further out than that. And property tax is composed of parts And each part is important and they all ebb and flow as times go on. You've seen the oil have a tremendous impact when it went from $50 to $100, and then again when it went back to $50.