Melinda Burns writes for “edhat” Santa Barbara (CA)

Some cannabis operators in Santa Barbara County still don’t pay taxes, but there are signs that the county is closing in on them.

Of 106 licensed cannabis growers and processors in county unincorporated areas, 15 failed to report their gross revenues during the most recent quarter, from Oct. 1 to Dec. 31, according to a recent update for the county Board of Supervisors. That’s down from 22 tax scofflaws in the previous quarter.

The county has put growers on notice that it will withdraw its “letter of authorization” for cannabis state business licenses if they fail to pay county taxes, said Assistant County Executive Officer Barney Melekian.

“The word went out that we were paying attention to that,” he said, adding that one grower was forced to surrender his state license and shut down last month; two others promptly paid up, and a fourth has been summoned to a county administrative hearing.

With 1,164 active state licenses for cannabis, Santa Barbara County is second in California only to Humboldt County in its embrace of the lucrative crop. The rapid influx of industrial-scale “grows” into the scenic Santa Ynez and Carpinteria valleys in recent years has produced an outcry for better enforcement and stricter regulations.

On Tuesday, the board authorized Melekian’s office to draw up a memorandum of understanding with the state Department of Food and Agriculture for use of its “Track-and-Trace” database for 60 days. As part of this pilot program, the county will investigate 250 state cannabis licenses in unincorporated areas, beginning later this year.

The state tracks the bar codes that are embedded in cannabis plants and products, following the crop throughout the commercial supply chain. Access to this database, Melekian said, will allow an auditing firm contracted by the county to check whether a grower’s self-reported tax revenues line up with the number of his plants. A mismatch, he said, could indicate that the grower is selling on the black market in California or diverting cannabis illegally to other states.

Monterey and Yolo counties also will participate in the pilot program. In the future, the state is expected to expand local access to track-and-trace data throughout California.

Tax rates for cannabis in Santa Barbara County are as follows: 1 percent of gross revenues for nurseries and distributors, 3 percent for manufacturers, 4 percent for growers and 6 percent for retailers and microbusinesses.

Melekian reports that from July 1 to Dec. 31 – the first six months of the current fiscal year – Santa Barbara County collected $4.8 million in tax revenues from cannabis. That’s a 50 percent increase over the first six months of fiscal year 2018-2019, when the county collected only $3.2 million.

“People are doing a more accurate job of reporting, and there is more growth and more sales,” Melekian said. “The first two quarters of fiscal year 2018-2019, everybody was just getting their feet under them. County tax collection is more efficient now.”

Read the full report at.  https://www.edhat.com/news/reining-in-cannabis-tax-scofflaws