Fiona Ma for State Assembly
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Tax officials tour cannabis sites

Elected representatives from the state Board of Equalization spent Tuesday and Wednesday exploring cannabis production in Humboldt County.

The two-day tour was dedicated to listening and learning from those who are at the ground floor of the cannabis industry, BOE 2nd District representative Fiona Ma said.

The insight the BOE gathered will be incorporated into their recommendation to the Drug Policy Alliance whose members are in the process of creating a 2016 ballot initiative for the recreational legalization of marijuana for adults over 21, she said.

"It has been a great experience learning Cannabis 101 for me and some of my team members who don't experience or come in contact with this industry everyday," Ma said.

Elected in 2014 to represent the district that encompasses the state's major cannabis producing counties, Ma said this was the first time she had seen cannabis being grown.

Ma, BOE 1st District Representative George Runner and their staff members, along with members of the hosting California Cannabis Voice Humboldt, Humboldt County Supervisors and other stakeholders, visited outdoor farms, indoor grows and Wonderland Nursery in Garberville.

"This is the first time that I have ever met and talked to growers," Ma said. "I think everyone was very open and honest about the industry and the history and what they are actually doing."

Growers described what goes into their operations and what comes back out of it, she said.

"It was just very eye-opening to have that type of honesty and it is important as a tax policy-maker to hear from folks who would be directly impacted," she said. "We don't want to create an underground economy, we don't want to create a black market, we really want to encourage everyone to come out of the shadows, to register, to become legal, to pay their taxes and that is where the fine balance is."

It will be key to tax cannabis at a level where growers want to comply and not push them away with too high taxes or too complicated paperwork, Ma said.

The Drug Policy Alliance has engaged the BOE to try to figure out how to address the complicated issue of taxation in their initiative, and the BOE hopes to be able to learn from Colorado and Washington and become a role model for other states if marijuana is legalized in California, Ma said.

This isn't just an issue when it comes to potential future legalization, but is something that already needs to be addressed on a medical marijuana level, Runner said.

"Medical marijuana is a taxable sale, and yet we have a very low compliance rate, and so the state misses out of a great deal of revenue," he said. "What we are trying to do is figure out a way to create greater compliance."

While growers themselves do not have an obligation to sales tax, the BOE is interested in the relationship between the grower and the retailer, Runner said.

"What I was impressed with is that there is certainly, from the folks we talked to, desire to find themselves in a regular community and be looked at as a normal operation," Runner said. "We are just trying to help them get there and let them know what steps they need to be making."

Like Ma, this was the first time Runner had seen the growing community first hand, and said he felt that the information exchange of the past two days was beneficial to both the industry insiders and the BOE.

"The more they find themselves in compliance their could be benefits for them as growers, so we are glad to help them understand that," he said.

Working with the BOE also allows Humboldt County to weigh in on finding a way to tax cannabis so that it will generate more revenue for the regions that grow the cannabis as opposed to where it is sold.

"A huge part of this discussion has been the revenue that can be generated for the state and for the local governments but how we go about that is critical," Humboldt County 3rd District Supervisor Mark Lovelace, who was one of three supervisors to take part in the tour, said. "If we rely on sales tax that will all be picked up at end point of sale which will take place some place outside of Humboldt County and we won't see a penny of it, or very little of it."

There are however a lot of different options for ways to move forward in a way that could direct tax revenue to Humboldt County, such as an excise tax that would direct some of the money back to where the product originated, he said.

It is also important to recognize the importance of not taxing so heavily that it incentivizes the continuation of the black market, Lovelace said.

Humboldt County's unique role in the industry is part of what makes it so crucial to have the BOE members visit the county, he said.

"For years too much of the discussion around regulation or legalization in California has been driven by urban areas ... and their issues are completely different than ours," he said. "We need the state to listen to us and understand our need is critical."

Having the elected officials visit the county and take a closer look at the industry will help both the state and the industry move forward in a positive way, CCVH board member Luke Bruner said.

CCVH invited the representatives to the area, asking for help from BOE and offering their support to the board, he said.

"They care about this, they care about the future of their state and they care about getting it right," Bruner said of the representatives who visited. "We have hundreds of farmers who want to do this but we don't know how."