Board of Supervisors approves cannabis cultivation tax rate decrease following review of market changes

The Sonoma County Board of Supervisors voted today to reduce County tax rates for cannabis cultivation in unincorporated areas to rates equivalent to 2.5 percent of gross receipts, converted to a square footage rate, following an annual review of market changes and data reported by local operators. The local cannabis tax rates for retail and manufacturing operations in unincorporated areas will remain the same. The amended Cannabis Business Tax Ordinance, which will go before the Board of Supervisors for final approval on May 6, 2025, will be effective July 1.  

The revised cultivation tax rates for unincorporated areas are as follows: 

• $0.36 per square foot for outdoor cultivation 
• $1.15 per square foot for mixed-light cultivation 
• $3.00 per square foot for indoor cultivation 

To gather data to conduct the annual cannabis tax rate review, County staff sent a questionnaire to all 66 permitted cannabis cultivation operators. Participation in and completion of the questionnaire was voluntary. A total of 13 responses were received representing 20 percent of the total number of cultivation businesses in the unincorporated county cannabis industry. 

According to County canopy verifications, the volume of outdoor cultivation in unincorporated areas is approximately the same as it was in 2024. The average price per pound decreased for both outdoor and indoor saleable products in 2025. The market price for outdoor cultivation, as reported by operators, remains much lower than for indoor cultivation. The average price per pound for indoor cannabis decreased from $606 in 2024 to $240. The average price for outdoor cannabis products decreased from $277 to $143. There was no mixed-light sales information recorded for 2024.  

Cannabis program costs are funded by cannabis business tax revenue. Due to declining revenue, the program has had to use fund balance to maintain program operations. The County’s overall cost of managing the cannabis program is projected to be $1.7 million for fiscal year 2025-26 and fiscal year 2026-27. Under the revised tax structure, the Cannabis Tax Fund balance is expected to remain solvent through fiscal year 2026-27. Cannabis business tax revenue in fiscal year 2025-26 is projected to be $700,000.  

The Cannabis Business Tax, or Measure A, was passed by voters on March 7, 2017, with 71 percent voter approval. Measure A provides a framework for taxation that sets maximum allowable rates for all operator types and grants authority to the Board of Supervisors to set lower rates, tax certain operator types and establish tax administration policies.  

Materials related to today’s action by the Board of Supervisors. 

Separately, the Board of Supervisors today also received an informational update regarding the overall Cannabis Program Update. 

For more information about Sonoma County’s revised Cannabis Business Tax Ordinance, Cannabis Program Update or other questions related to cannabis operations in Sonoma County, please email Cannabis@Sonoma-County.org or visit the Cannabis Program page.  

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Media Contact:
Dan Virkstis, communications specialist
publicaffairs@sonoma-county.org
(707) 565-3040