Measure S | Hundreds of Humboldt cannabis growers risk losing permits over unpaid taxes

Mar 64 min read

Hundreds of Humboldt cannabis growers risk losing permits over unpaid taxes - What does this mean for Humboldt Legacy?

Humboldt County is taking steps to enforce a long-standing cannabis cultivation tax that was passed in 2016, a move that could put significant pressure on struggling growers. Many cannabis farmers, already grappling with financial instability due to market conditions, may not be able to meet their outstanding tax obligations, putting them at risk of losing their permits. As the county moves toward revoking permits for those with unpaid taxes, the future of Humboldt’s legal cannabis industry hangs in the balance.

The History of Humboldt County’s Cannabis Excise Tax

In 2016, Humboldt County voters approved Measure S, a cannabis excise tax requiring legal cannabis cultivators to pay between $1 and $3 per square foot of cultivation area. The intent behind this tax was to generate revenue for the county while helping to mitigate environmental damage caused by unregulated cannabis farms. Revenue from Measure S has been allocated to various county services, including environmental restoration efforts for abandoned grow sites.

However, since its implementation, collecting these taxes has been a significant challenge. Legal cannabis farmers have struggled to keep up with payments due to market instability, a sharp decline in wholesale cannabis prices, and an oversupply of product. Recognizing these difficulties, the county suspended the tax in 2022 and 2023 to provide relief for struggling growers. Additionally, in 2023, the tax rate was slashed by 90% to alleviate some financial burden on legal cultivators.

Despite these temporary measures, many growers remain burdened with unpaid tax obligations from previous years. Now, with the county poised to resume enforcement, those who are behind on payments could face serious consequences.

March 31 Deadline: What Happens Next?

Humboldt County has set March 31, 2025, as the deadline for cannabis farmers to settle outstanding tax debts. If growers fail to meet this deadline, they could face the suspension—and eventual revocation—of their cultivation permits.

The county has also allowed farmers to enter into tax payment agreements in an attempt to help them get caught up. However, the success rate of these agreements has been underwhelming. Humboldt County Planning Director John Ford noted that while over 400 growers have entered into tax payment agreements, only about two dozen have fully paid off their overdue taxes. This means that a significant portion of licensed cultivators still face the risk of permit suspension.

The county’s Board of Supervisors is set to discuss the possibility of granting an extension at an upcoming meeting on March 11, 2025. This decision could determine whether farmers receive a temporary reprieve or are forced into an even more precarious financial situation.

The Financial Struggles of Humboldt’s Cannabis Farmers

Humboldt County has long been considered the heart of California’s cannabis industry, with a deep-rooted history in small-scale, high-quality cultivation. However, since legalization, farmers have faced a brutal economic reality.

The cannabis market has been plagued by an oversupply crisis, leading to a collapse in wholesale prices. Many farmers who once thrived under the gray market have struggled to remain competitive in the legal framework, where regulatory fees, compliance costs, and high taxes create significant financial strain.

According to Natalynne DeLapp, Executive Director of the Humboldt County Growers Alliance, many farmers simply do not have the means to pay off their outstanding tax debts.

“A farmer's ability to have paid off what could be a $30,000 tax debt has been nearly impossible,” DeLapp said.

She estimates that 75% of legal growers are currently at risk of losing their permits due to unpaid taxes. If these farmers are forced out of business, the county could see a dramatic reduction in legal cannabis production, potentially driving more cultivation back into the illicit market.

The Potential Consequences of Permit Revocations

If Humboldt County proceeds with permit suspensions and revocations for growers who fail to meet the March 31 deadline, the effects could be devastating:

Mass Closures of Small Farms – Many small-scale cultivators may be forced to shut down permanently, unable to pay off debts or transition into another industry.
Job Losses in the Local Cannabis Economy – With fewer licensed farms operating, cannabis-related jobs—including those in processing, distribution, and retail—could also decline, affecting the broader Humboldt economy.
Increased Illicit Market Activity – If legal growers lose their permits, some may choose to return to the unregulated market, exacerbating issues of environmental harm, untested products, and law enforcement challenges.
Loss of Tax Revenue for the County – While enforcement aims to collect overdue taxes, shutting down farms could ultimately reduce future tax revenue, leading to funding shortfalls for county services.

Can the County Find a Better Path Forward?

With so many cultivators struggling, the Humboldt County Board of Supervisors faces a critical decision. Should they enforce the deadline strictly, or should they extend payment terms to help more farmers stay in business? Some possible solutions include:

Extending the Payment Deadline – Granting more time for cultivators to pay back taxes could prevent mass closures while still holding growers accountable.
Offering Additional Tax Reductions or Forgiveness Programs – The county could explore partial forgiveness for long-standing tax debts, ensuring growers have a feasible path forward.
Reforming Cannabis Taxation – A reevaluation of how cannabis taxes are structured could create a more sustainable model for the industry, reducing financial burdens while still funding county services.
Supporting Farmers with Market Development Initiatives – Investing in programs that help Humboldt growers access new markets and distribution channels could improve their financial standing and ability to meet tax obligations.

What Comes Next?

The March 11 Board of Supervisors meeting will be a pivotal moment for Humboldt’s legal cannabis industry. If the county decides to move forward with enforcement as planned, the repercussions could be severe for hundreds of farmers. However, if a more flexible approach is taken, there may still be hope for struggling cultivators to recover and remain in the legal market.

For now, Humboldt’s cannabis farmers must prepare for the worst-case scenario. Those with outstanding tax debts should explore payment options, seek legal guidance, and engage with industry advocates who are working to push for solutions.

The story of Humboldt’s cannabis industry is far from over. Whether the county chooses enforcement or compromise, the coming months will shape the future of one of California’s most renowned cannabis regions.