With Project Trellis, an initiative to help the local cannabis industry survive and thrive in the regulated market, Humboldt County is planning for the future right now. Approved by the Board of Supervisors on March 12, Project Trellis gives back to the industry, at a time when it needs it the most, and it will help work to ensure sustainable revenue through Measure S, so the whole county can benefit now and in the future.
Measure S is scheduled to contribute over $20 million in the next fiscal year to fund vital needs such as: $9 million for public safety expenditures (including additional sheriffs), $655,000 to job creation, $400,000 to update the Rio Dell library, and $9.6 million to other county services. That means 90% of Measure S funds are set to benefit the entire community. Project Trellis consists of re-investing 10% of Measure S funds back into local cannabis businesses. While 10% is only a modest fraction of overall Measure S revenues, and while the board’s vote was unanimous, some folks still have concerns about whether the plan is fair to other local businesses. After all, “Why give the cannabis industry hand-outs?”
The answer is threefold. First, according to the county the cannabis industry drives the majority of economic activity in Humboldt, supporting several thousand local jobs and generating millions in tax revenue. Second, the cannabis industry is heavily regulated and faces hurdles that other sectors do not, including additional state and local taxes that no other agricultural producer has to pay. Third, legal cannabis businesses are struggling to find their footing in the still-evolving marketplace ushered in by legalization and regulation. The goal of Project Trellis is to support these local small businesses, and help them through the transition by reinvesting a small portion of the tax revenue back into the industry. The payoff for the county is not just future Measure S cultivation taxes, but also property tax revenues and increased sales tax revenues thanks to living wage jobs and a thriving local economy.
Even though cannabis is now legal in California, cannabis businesses are still denied access to USDA agriculture programs, small business development centers, bank loan and workforce training — all resources other industries have direct access to. Unfortunately, federal prohibition places these resources out of reach at the exact moment they are needed most: just as local cannabis businesses are struggling to get up to speed on new and evolving regulations. These businesses have put everything on the line over the past few years, weathering nearly a dozen major legislative and regulatory policy changes. They have spent tens of millions of dollars on land-use planning and business compliance, licensing and fees, new state and local taxes, plus all the associated costs of hiring consultants, attorneys, and engineers — again, just like other business sectors but without the resources those other businesses have.
Project Trellis is not a handout; funding comes from the cannabis growers themselves by way of Measure S taxes. Reinvesting money back into the cannabis industry, to help stabilize it and promote growth, is in line with the intent of the original measure since it will help ensure future revenues.
Nor is the strategy unique: several years back, the Headwaters Board spent $750,000 to help market Humboldt redwood to California consumers, and we continue to see benefits from that investment. Project Trellis will likewise promote the Humboldt cannabis brand as a mark of quality — something our local cannabis businesses can deliver, given the chance.
Most importantly, Project Trellis isn’t just something one local industry needs. It is something Humboldt County needs. Tax revenues are down. Sales tax receipts have dropped 9% since cannabis industry regulations first hit in 2016. Money that used to prime the economic pump via retail and discretionary purchases was redirected into compliance, taxes and fees. The local economic slowdown is preventing Measure Z from accomplishing its goal of boosting tax revenue to support public safety and essential services. That trend needs to be reversed.
It therefore makes sense to help these local businesses, which are denied access to resources available to traditional industries, cope with legal and regulatory hurdles so they can gain a foothold, and in the near future stand strong. As one supervisor pointed at the March 12 meeting, the cannabis industry can only provide that value (and revenue) if it continues to exist. That’s why supporting the emerging local cannabis industry at this crucial juncture is literally an investment in the future, and an investment worth making.
Executive director Terra Carver and operations director Natalynne DeLapp write on behalf of the Humboldt County Growers Alliance, the trade association advancing the interests of more than 220 cannabis businesses in Humboldt County. For more information, visit www.hcga.co.