The Downward Trend in Cannabis Tax Revenues

Prices Are Low, Growers Keep Quitting, and It’s 'Not Very Positive,' Santa Barbara County Officials Say

The county assesses a 4 percent tax on cannabis growers' gross receipts, or sales. | Photo by Melinda Burns

A disappointing first quarter for fiscal year 2024-25 garnered only $1.3 million in cannabis tax revenues for Santa Barbara County, the worst first quarter showing since the program began in 2018, the County Executive Office (CEO) reported this month.

The first quarter, covering July through September, does not include the twice-yearly spring and fall harvests of outdoor cannabis in the North County. The second quarter is likely to bring in more taxes, officials said.

But the county’s projected cannabis tax revenue for the current fiscal year is only $5.4 million — less than the $5.8 million that was collected during fiscal years 2022-23 and 2023-24, and well below the high of $15.6 million in cannabis tax revenues that was collected in 2020-21. (The fiscal year extends from July 1 to June 30.)

Overall, the record shows, the county collected $55.2 million in cannabis tax revenues from mid-2018 to mid-2024. In recent years, however, a glut of cannabis on the market in California, much of it grown in Santa Barbara County, together with thriving sales of untaxed illegal pot statewide, have conspired to keep prices low and tax revenues down. “Fresh flower” is selling for only $250 per pound today, on average, compared to $1,000 per pound in 2020. The county imposes a tax of four percent on growers’ gross receipts, or sales.

“It’s going to be a continued contraction,” Carmela Beck, the county’s cannabis program manager, told the county Board of Supervisors on Jan. 14. “We’re seeing a lot of large, well-known companies going out of business and also consolidating. Many small-sized farmers are going out of business. It’s going to be a plateau, and it’s not very positive, currently.”

According to the CEO, growers at 43 cannabis operations have surrendered their annual county business licenses, withdrawn their business license applications, or abandoned their projects — temporarily or permanently — since the county approved its cannabis ordinance in 2018, and the exodus has contributed to the decline in tax revenues. (Growers who have obtained zoning permits for cannabis cultivation can re-apply for business licenses at any time.)

To make ends meet, the county used about $94,000 in carryover cannabis tax revenues from previous years to cover $5.9 million in ongoing cannabis-related costs and deferred maintenance projects during fiscal year 2023-24, the Jan. 14 report to the board shows.

These expenses included $227,000 for cannabis education, $372,000 for cannabis audits by the county Tax Collector, $662,000 to cover cannabis-related administrative costs at the CEO, $1.6 million for deferred maintenance costs in parks and other services, and $3 million for cannabis enforcement. (Sheriff’s Office enforcement against illegal “grows” was obviously taking place at some level before the county initiated its cannabis program, but a $3 million commitment would have required a vote of the board, the CEO said.)

In addition, the report shows, the county used $1 million in carryover cannabis tax revenues to pay for one-time expenses during 2023-24. These included $50,000 for a restroom at Rincon Beach Park, $95,000 for handling appeals of cannabis projects, $100,000 for youth safety programs in Lompoc and Santa Maria, $115,000 for a zero emissions vehicle specialist, $171,000 to draw up new rules governing the expansion of utility-scale solar projects, and $500,000 for a sewer project in Mission Canyon.

Dropping Out

The county’s cannabis ordinance allows up to 1,575 acres of outdoor cannabis in the North County, but to date, only 560 acres have been licensed by the county for cannabis cultivation in the North County. (The CEO does not track how many of the 560 are currently under cultivation.) North County growers accounted for only 18 percent of the county’s cannabis tax revenues in fiscal year 2022-23, the most recent year for which the breakdown is available.

During the spring and summer of 2024, the record shows, cannabis growers from Buellton to the Cuyama Valley surrendered their business licenses for Greenies Management at 801 East Highway 246, San Antonio Ranch 101 at 2051 North Highway 101, and Gypsy Canyon Farms at 2900 Gypsy Canyon Road. They withdrew their business license applications for Cuyama Greens at 501 Harvey Road, Dynamind Grounds at 2051 Jonata Park Road, Villa Americana Corporation at 125 North Refugio Road, Stateside Greens at 3851 Telephone Road, and 92nd G25 at 851 East Highway 246.

North County projects that were deemed abandoned by the county were Chips19 at 7855 Old Careaga Ranch Road; Farmily 805 at 2501 San Miguelito Canyon Road, and SBGL at 705 Mail Road.

In the Carpinteria Valley, the cannabis ordinance allows up to 186 acres of cannabis in greenhouses, but only 120 acres are currently under cultivation. Valley growers accounted for 82 percent of the county’s cannabis tax revenues in fiscal year 2022-23.

But even in the valley, where cannabis can be harvested year-round, some growers are retrenching.

At Vista Verde Farms at 3450 Via Real, formerly Gallup & Stribling Orchids, the zoning permit for 13 acres of cannabis in greenhouses has expired and the business license application has been withdrawn. The property is owned by Case Van Wingerden and his son, Alex; and Alex is listed in state documents as the CEO of Vista Verde Farms. Cannabis has never been grown there. The Van Wingerdens are among the largest cannabis growers in the valley: They own 18 acres of cannabis greenhouses currently under cultivation at Valley Crest Farms and Ceres Farm on Casitas Pass Road.

In addition, Cindy and David Van Wingerden, the owners of Farmlane, have surrendered their business license for nine acres of cannabis in greenhouses at 1400 Cravens Lane. They continue to grow cannabis on 5.6 acres at 1540 Cravens Lane.

Meanwhile, the largest single proposed cannabis operation in the valley and one of the first to be approved for a county zoning permit, back in mid-2019 — VR1 Farms, 14 acres of greenhouses at 3892 Via Real — is not yet under cultivation. The business is registered by the state to Christopher Vaughn of South Gate; a county business license is still pending.

Upcoming Hearing

In other cannabis matters, the county Planning Commission will hold a hearing on Wednesday to discuss tightening the odor control regulations for the greenhouse industry. The Board of Supervisors wants to require the installation of expensive carbon filters called “scrubbers” or equivalent technologies to clean up the air prevent the smell of pot from wafting out of the roof vents and into urban neighborhoods. Most growers have not adopted these filters for cultivation: Some have said the expense would put them out of business.

In addition, the commission will consider amending the county’s zoning ordinance to implement odor inspections at the property lines of greenhouses in response to complaints. A potential odor threshold and odor-detection technology will be debated on Wednesday.

Melinda Burns is an investigative journalist with 40 years of experience covering immigration, water, science, and the environment. As a community service, she offers her reports to multiple publications in Santa Barbara County, at the same time, for free.