The Grand Jury Speaks: SB Loses $3M Each Year on Cannabis!

Recently, our 2024-25 Grand Jury confirmed what I have long suspected – our cannabis program is shockingly unprofitable! Over five years the program posted $15M in losses by rewarding 30 or so cannabis growers with a hugely favorable tax scheme while spending lavishly to administer the program. 

On June 20, the Grand Jury released Cannabis Taxation & Expenditures, a report that took an in-depth look at our cannabis cultivation tax revenue and expenses dating back to 2018. Over the most recent five years (2021-2025) we lost $3M annually coddling this declining industry. These losses were driven by bloated, oftentimes hidden, expenses that averaged $9M each year and cannabis prices that plummeted by 500%. At a time when social programs require County help, it is a fiduciary crime to use our tax dollars to finance a handful of pot growers – these folks are not curing cancer! Fun Fact: In 2024, grower Glass House posted $200M in revenues, up 25% from 2023.

In 2022, we generated $8M in revenue yet it cost more than $12M (Wow!) to administer the program resulting in a year-end loss of $5.2M. This year, assuming $5.5M in tax revenue, we are expected to lose nearly $4M based on $9.4M in expenses. With just $1M left in program reserves (between 2018 and 2020 there were profits) the future prognosis is clear: EMBARRASSING! Note: I have variously estimated annual program costs between $8M – $12M.

The Jury discovered that our Sheriff’s Department secured $2M+ over the past few years in state grants to eradicate illegal grows – this, at a time when these grows were “negligible” and the County was shelling out millions for similar enforcement. Did the County even know about this boondoggle funding? 

Last year, our Supervisors had the chance to change our tax scheme, which relies on self-reported (“trust me”) cash receipts. Rather than increasing the rates and/or moving to a more easily verifiable system (square footage grown), they punted, opting instead on $300K for tax audits. The Jury found that in 2024 two audits occurred, one revealed no issues while the other is currently “under protest.” So, half are paying what they owe, and half are not. Nice!

The Jury made a variety of recommendations, the most obvious of which was to suggest that the program minimally breaks even. Given the many citizen-funded lawsuits and cannabis’ continuing public nuisance – this is generous. 

LET’S GET REAL! Cannabis serves no other purpose than to keep scores of County workers and County-close consultants employed. Further, that the industry has been indulged like no other by our County’s unique tax scheme where the grower pays BUBKIS and we play the fool. My Recommendation: Increase taxes by 10x, sunset open grow cannabis in North County and require SEALED greenhouses (the only true “fix”) in the South, regardless of cost or consequence, i.e., end the
embarrassing madness!  

Jeff Giordano,
Santa Barbara County resident