SANTA CRUZ — The Santa Cruz County Board of Supervisors on Tuesday unanimously approved an ordinance that will allow medical marijuana dispensaries to sell recreational marijuana starting on Jan. 1.
The move made Santa Cruz one of the first counties in the state to lay the groundwork for legal marijuana sales.
That is when Proposition 64 will take effect, the voter-approved law that legalized the recreational use and possession of the drug. Approved by 57 percent of voters, Prop. 64 legalized recreational cannabis use in California for adults.
The rules apply to 12 dispensaries located in the unincorporated parts of the county.
Dispensaries must still be licensed by the State of California, but it is still unclear what the process will be.
Supervisor Greg Caput voted in favor of the regulations, but stressed that he does not want it to damage the existing agriculture industry.
“Prime ag land mostly in district 2 and district 4 goes for $2,500-plus an acre,” he said. “That is because it is the best prime ag land anywhere in the United States. I want to protect that. When it comes to our ag land I want to protect our strawberry growers, our berry growers and everybody else.”
Supervisor Zach Friend cited the staff report, which states that Santa Cruz County could produce as much as 13 percent of California’s marijuana supply.
While the vote to approve recreational sales passed with almost no discussion, the day did not come without controversy.
The supervisors also narrowly approved a plan to tax growers and manufacturers at 5 percent, a number that will rise to 6 percent in 2020 and 7 percent in 2022.
Dispensaries in the county will still charge a 7 percent sales tax to its customers, who also face an 8 percent state sales tax.
The local tax would help pay for the estimated $1.4 million it would take to enforce the regulations surrounding the cannabis industry.
In addition, anyone purchasing pot will pay a 15 percent excise tax.
The state will also go after cultivators, who will pay $9.25 per dry-weight ounce for cannabis flowers and $2.75 per dry-weight ounce for leaves. Those numbers will almost certainly be added into the final over-the-counter price for consumers.
In all, anyone wishing to purchase recreational marijuana in the unincorporated areas of Santa Cruz County will face a hefty 30 percent markup.
By comparison, the State of Oregon charges a 17 percent tax. Cities can tack on an additional three percent, with voter approval.
Several people in attendance at the meeting expressed concern that the high tax rate will price out potential customers and drive them instead to the black market.
Christopher Carr, who runs Kind People’s Collective in Live Oak, said he helps “medically bankrupt” patients afford marijuana through the dispensary’s Compassion Program.
Carr warned that high taxes will hurt people who he said sincerely need the drug.
“As Santa Cruz we have a legacy here that we need to be mindful of, of stewardship, and when we overzealously tax a certain space, the people who really suffer are the ones who are medically bankrupt.”
Moving into a recreational market results in “medically vulnerable” people getting squeezed out of the market, he said.
“…and cannabis becomes a privileged endeavor that only the white-collar members of the community can afford the tax price,” Carr said.
The supervisors approved the tax plan on a 3-2 vote. Supervisors John Leopold and Bruce McPherson dissented.
McPherson also expressed concern that high taxes will hurt retailers and drive customers to the black market.
The county is in the process of drafting regulations related to cannabis cultivation. A draft Environmental Impact Study is available for review, with comments accepted through Oct. 31 at 5 p.m.