Christopher Neely covers a mixed beat that includes the environment, water politics, and Monterey County's Board of Supervisors. He began at the Weekly in 2021 after five years on the City Hall beat in Austin, TX.

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Christopher Neely here, thinking about the free market and the times when the government finds it necessary to intervene on its own behalf. 

If you haven’t heard, the cannabis industry across the state and in Monterey County is experiencing some growing pains that are resulting in shrinking value. During the pandemic summer of 2020, the cannabis market was riding high, reaching roughly $1,200 per pound according to local market insiders. As summer of 2021 closed, the price per pound had dropped to as low as $400

What happened? Well, people want a piece of the California cannabis market and an uptick in growing operations has caused a saturation of supply. Demand skyrocketed during the pandemic and was able to meet that supply, but as the pandemic waned and people’s day-to-day began to involve more than their couch and Netflix, demand sank and revealed the issues of an oversaturated market. 

This market correction freaked out cannabis growers, who organized and pressed government officials for relief. The Monterey County Board of Supervisors took notice—it’s hard not to notice when a crop valued locally in 2020 at $484.1 million drops by around 75 percent in per-pound value in a single year. 

After months of listening to their local cannabis growers navigate crisis mode, the supervisors intervened in the market with a welcomed tactic—tax relief. After freezing an automatic tax increase on growers scheduled for 2021-22, the supervisors voted on Oct. 26 to increase the number of times growers could amend the taxable square footage of their crop canopy from once to twice per year. 

This measure was supported by the cannabis industry long before the crop correction, albeit for different reasons. Let’s say a grower had some emergency maintenance she had to perform and needed to shut down a portion of her crop canopy. To avoid being taxed for her entire canopy area when only some of it is producing cannabis, she alerts the county of the change. In the past, since she was only allowed one amendment per year, she would have to wait an entire year before she could activate her entire crop canopy again. 

Now, however, the ability to adjust the taxable crop area twice per year is supported for another reason. A grower who submits his crop area as 1,000 square feet can decrease his square footage for the fall harvest, when the market is more saturated, and then turn around and increase the square footage come spring when hopes for a strong market are typically higher, says Bob Roach, executive director of the Monterey County Cannabis Industry Association. 

Roach says he does not expect the market to recover from this forced correction any time soon, but relief in any form helps the operators in navigating tough times. The tax relief will, in the short term, hurt the county’s cannabis tax revenues; however, if the measure helps buoy local growers through uncertain times, it helps the county maintain a strong market in the long run. 

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