The average 2,300 square foot size of a cannabis garden, suggested by California Department of Fish and Wildlife, is only viable now because prices have not yet bottomed out and no one is paying half their income in administrative and tax expenses. The following facts, figures and estimates of the averages faced by the Humboldt family paint a very grim picture. We are going to be regulated and taxed into extinction!
The Northcoast Environmental Center has suggested that total garden canopy sizes be no more than 2,000 sq. ft. and only 99 plants. HUMMAP has suggested that total garden canopy size be no more than 2,500 sq. ft.. We will use the average of 2,300 sq. ft. that the California Department of Fish and Wildlife overflights have suggested for our calculations.
Based on interviews of local growers, the “maximum potential crop size” is close to 1/10th lbs / sq. ft.. If the garden is 2,300 sq. ft., then this represents 230 lbs / year. The future, average sales price will most likely drop to $1,000.00 / lb. This figure is based on the declining black market price point – nearly a $200-300 price drop over the last few years.
So far, the cannabis farmer’s total. gross, annual income is $230,000 a year. Let us now subtract the potential costs of making this gross income.
– The income tax bracket for a 3 person farming family is 25-28% (33% if single) or $57,500+; after taxes, the farmer will have $172,500 left. This rate is based on IRS tax rates that can be verified on their internet site. Most federal deductions are not allowed since cannabis is taxed on gross sales!
– Property tax: the median property tax is $1651 for a home and curtilidge (taken from http://www.propertytax101.org/california/humboldtcounty). This leaves the farmer with $170849.
– Interviews of local growers indicate that the average cost of producing 1 lb. is $500 / lb. If we multiply by 230 lbs, this represents another $115,000 that farmer must pay, leaving them with $55,000.
– The Census Bureau suggests that average business expenses are about $10,000 for this income bracket; this leaves our farming family with $45,000. At this point, the income is just above the average cost of living for a 3 person family in Humboldt county after taxes.
– The County Business License is $335.45 each year (taken from humboldtgov.org/265/Business-Licenses).
– The California Department of Food and Agriculture will likely assess $150 each year for a California Nursery License – which all Humboldt nurseries pay.
– The State Board of Equalization charges a $25 per year registration fee to register your business and obtain a Sale License.
– CCVH has suggested a proposed excise tax of 50 cents / sq. ft. or $1,150 on a cannabis farm of 2300 sq. ft. (excise tax is 15% of sales in Colorado)
– Potential County permitting fees could be as high as what Colorado is levying – a whooping $10-15,000. We will use a more modest, and unsubstantiated, $2,300 each year (this is $1.00 assessed per square foot).
These five items add up to $3,969, leaving the farmer with $41,031 yearly income. This is a “best case cenario.” These fees could be 10 times as expensive!
TOTAL INCOME AFTER TAXES AND EXPENSES: $41,031
The Census Bureau has posted the average cost of living for a family of three in Humboldt County varying between $40-45,000.
Now we will add in expected compliance costs, including the average cost to meet code (including employees, quarters, kitchens, bathrooms, work environment, insurance and other infrastructure) at an estimated $10 / sq. ft. or $23,000 (or much more); the average well drilling and installation cost of about $10,000 (or, again, much more); and the average cost to install a pond of about $10,000, based on local prices (or much more). These developmental costs represent a minimum of $43,000 in potential costs. We strongly suspect these costs will be much higher, but at $43,000, the costs represents nearly the entire yearly income of our farmer.
THIS MEANS THAT THEY ARE LEFT WITH NOTHING!
No money to buy a home.
No money for college.
No money for health issues.
These expenses will wipe out the majority of the small growers!
These “caps” to save the small grower are going to destroy them.
In desperation, these people will retreat to the black market and necessary regulation will fail.
If your garden is 2,300 sq. ft. now then after legalization that footprint will have to double to maintain your current income. We want more than a subsistence life for our children. No one knows enough about where this business is going, to be putting limits on it. We need to stay agile. Forbes magazine has recently suggested that we should be prepared to pay 50% of our current income to the federal government!