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Santa Barbara County Plans to increase focus on Cannabis Tax Compliance, Illegal Grows

Santa Barbara County officials plan to increase investigations of illegally operating cannabis cultivators, institute an audit of cannabis revenue reporting for tax payments and participate in a test of a state track-and-trace program, according to a report delivered to the Board of Supervisors on Tuesday.

That was some of the information in an update on cannabis compliance, enforcement and taxation for the first quarter of the 2019-20 fiscal year delivered by Barney Melekian, assistant county executive officer, and Steven Yee, fiscal and policy analyst.

Supervisors were concerned about legal noncompliant operations that may have expanded their operations and are now illegal as well as operations that are reporting no financial activity and therefore not paying any taxes.

First District Supervisor Das Williams said he wants the compliance team to make sure those reporting no financial activity are not operating.

Melekian said the county will be making contact with those reporting no financial activity, and staff expects to have a tax compliance audit launched within 90 days.

Cannabis tax revenue Q1 2019-20
A graph from the Santa Barbara County Executive Office shows how cannabis tax revenue has increased from the first quarter of the 2018-19 fiscal year to the first quarter of the 2019-20 fiscal year.

“It would be really nice to see who’s paying what,” said 5th District Supervisor Steve Lavagnino.

Santa Barbara County has been chosen, along with Monterey and Yolo counties, to participate in a “beta test” of a track-and-trace system to follow cannabis products from seed to final product and from source to consumer.

Yee said that will be a “critical component” of the tax audit.

Although county officials have heard a number of complaints about a lack of action against illegal cannabis operations, the county’s cannabis enforcement program is apparently considered the best by state regulating agencies.

Williams noted the county’s enforcement team is more “cutting edge” than the other county teams in California.

“This is the model they would like to see replicated throughout the state,” said Board Chairman and 2nd District Supervisor Gregg Hart.

To Read The Rest Of This Article By Mike Hodgson on Lompoc Record

Published: January 28, 2020

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