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Plummeting Cannabis Tax Revenue Causes Santa Cruz County to Reevaluate

Bob Mason
Plummeting Cannabis Tax Revenue Causes Santa Cruz County to Reevaluate

Santa Cruz County’s plummeting cannabis tax revenue has caused city officials to reevaluate their entire budget.

Funds from cannabis tax intake in the county spiked at $6.3 million in 2020-2021. At that time, county staff hoped that this could be a reliable source of revenue for future civic projects and infrastructure upkeep.

The county budget for 2022 was planned with a similar amount of cannabis tax revenue in mind.

Credit: RoschetzkyIstockPhoto / Getty Images

However, last year, Santa Cruz County saw a steep decline in profit from this particular tax. A dropoff of about 50% forced city officials to realize a new projection of under $2 million a year.

It is worth noting that cannabis use in the county seems to have been at its height during the pandemic, when a record number of people were either laid off from their jobs or working remotely. This is undoubtedly one of the reasons cannabis tax intake has fallen off so sharply, though there could be other factors as well, including people purchasing marijuana products in other nearby counties like San Francisco County.

Credit: Getty Images

Some people may have also turned to purchasing cannabis from illegal outlets, according to county officials.

In a CBS News report, county budget manager Marcus Pimentel expressed reticence about current tax revenue, saying, "Sales taxes, we're concerned about. We're seeing a drop this year compared to our projections."

Thanks in large part to the cannabis tax decline, Santa Cruz County is now bracing to face a deficit of over $6.3 million for each of the next four years. In 2027-2028, the county is projected to be in the red by upwards of $8 million.

Speaking specifically about marijuana taxes, Pimental said, "We don't know where that floor's going to be. It [tax revenue] dropped really precipitously this last year.”

What do you think about this steep decline in cannabis tax revenue in Santa Cruz County?

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Bob Mason

Bob Mason

Bob Mason is the founder of Coast Financial Services Inc. servicing both the Santa Cruz, and San Jose areas. Bob Mason is a skilled financial professional who is fully equipped to assist any of your accounting needs. Founding his firm in Santa Cruz, Bob understands the importance of small businesses and how they form the backbone of the area. Coast Financial Services, Inc. has been dedicated to the growth and profitability of businesses in Santa Cruz for 17 years. To learn more about Bob Mason and the rest of his team, visit their website.

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