Nov. 8, 2018

On Tuesday, voters across the country took action on cannabis. Several states considered ballot measures that dealt with both recreational and medicinal cannabis. In Michigan, voters approved a measure to legalize the adult use of cannabis, and citizens in Utah and Missouri both voted to allow for the medical use of cannabis. However, voters in North Dakota rejected a measure to legalize adult-use. Ten states and Washington, DC have now legalized cannabis for recreational use for adults over the age of 21. And, 33 states have legalized medical cannabis, representing roughly one-fifth of the US population. In addition, Attorney General Jeff Sessions resigned yesterday. While it’s too early to speculate what this means for de-scheduling efforts at the federal level, Sessions had long been seen as an obstacle to relaxing drug laws and access to banking services in legalizing states. 

In California, nine counties placed cannabis measures in front of voters for the November 2018 General Elections. The measures ranged from legalizing or banning cannabis to giving counties the ability to impose cannabis taxes.

Contra Costa County, Measure R

Voters in Contra Costa County approved Measure R by 72%. The measure enacts both a 4% tax on gross receipts on all cannabis business in the county and a $7 per square foot of canopy tax on cultivators. The measure is expected to generate between $1.7 million to $4.4 million for the county’s general fund. 

Del Norte County, Measure B

Measure B was approved by 62.75%. The measure enacts a 2-6% gross receipts tax on non-medicinal retail business; a 1-3% gross receipts tax on cannabis manufactures; a 1$ per square foot tax for outdoor cultivators; and a $3 per square foot tax on indoor cultivators. Currently, Del Norte County has a ban on commercial cannabis activity, which is expected to be lifted in the near future now that Measure B has passed.

El Dorado County, Measures

El Dorado County had 5 cannabis related questions on the ballot this November. Measures N, P, Q, R and S were collectively approved by roughly 59% of voters in El Dorado County. Measures P, Q, R and S together allow for outdoor medicinal and recreation cannabis cultivation, indoor cultivation, and commercial and medicinal retail and distribution. Measure N is a comprehensive regulatory ordinance which includes tax rates for all cannabis activity in El Dorado County. The measure sets the following minimum and maximum rates with authority granted to the Board to change the rates at their discretion.

• Cultivation Tax: Either a $1 minimum to $30 maximum per square foot or 1% to 15% gross receipts tax. 
• Distributors Tax:  A gross receipts tax of between 0% to 10%
• Manufacturing Tax: A gross receipts tax of between 2.5% to 10%
• Retail Storefront Tax: A gross receipts tax of between 4% to 10%
• Delivery Retail Tax: A gross receipts tax of between .5% to 10%
• Testing Tax: A gross receipts tax of between 0.5% to 5%

Kern County, Measures J & K

Kern County voters rejected both Measure J & Measure K by a vote of 61% and 53% respectively. Measure J would have allowed and regulated commercial medical cannabis cultivation, manufacturing, testing, retailing, distribution, and micro-business in the unincorporated areas of Kern County. Measure K would have allowed medical and recreational commercial cannabis activity in the unincorporated areas. These measures both would have overturned the current ban in Kern County on commercial cannabis activity which remains in effect. Currently there are 20 or so medical cannabis dispensaries operating in Kern County operating under previously issued county permits which are set to expire this November.

Lake County, Measure K

Voters passed Measure K in Lake County by 69%. The measure will enact a cannabis tax of $1 per square foot for nurseries and cultivators; a 2.5% gross receipts tax on cannabis manufacturing and distribution; and a 4% gross receipts tax on cannabis retail and delivery business. The tax will take effect January 2021.

Lassen County, Measure M

Lassen County voted to pass Measure M by 53%. The county does not allow for commercial cannabis use, but does allow for personal cultivation. Measure M allows the County to adopt a cannabis business tax at a rate of up to $3 per square foot for cultivators and up to an 8% gross receipts tax on all other cannabis businesses operating in the unincorporated area of the county. Revenue will go toward the general fund.

Nevada County, Measure G

Nevada County voters approved Measure G by 75%. The measure enacts an up to $10 per square foot, $8 per ounce tax, or up to 10% tax on cultivators. It also enacts an up to 10% tax on gross receipts for all other cannabis business licensed in the county including nurseries. The Board has set the initial rates at 2.5% for both cultivators and other cannabis business with the county requiring minimums levels of tax payments.