SANTA BARBARA COUNTY, Calif. — Santa Barbara County’s once-high hopes for cannabis tax revenue are going up in smoke, with a new Grand Jury report warning the program may soon become a financial burden without major reforms.
Tax revenues peaked at $15.7 million in fiscal year 2020–21 but are projected to bring in just $5.4 million this year. At the same time, compliance, enforcement and administrative costs are climbing. The Grand Jury warns the program could run a $3.8 million deficit by fiscal year 2025–26 if changes aren’t made.
The drop in revenue is driven by an oversaturated market, declining wholesale cannabis prices, competition from illegal suppliers and high costs of doing business. The wholesale price of cannabis has fallen from about $1,200 per pound in 2020 to as low as $250 this year, the report said.
Rising costs have made it increasingly difficult for cannabis growers in Santa Barbara County to stay in business. Cultivators face steep financial barriers, including application fees as high as $10,450, annual renewal fees nearing $5,000, and compliance management costs exceeding $4,200. In addition to these regulatory expenses, growers must absorb high startup costs for infrastructure, security and maintenance. The report notes that many operators have been forced to shut down because they can no longer recoup their investments or turn a profit.
The county continues to face challenges in collecting accurate tax revenue due to its reliance on self-reported gross receipts from cannabis operators. Only three audits were completed last year, with six more planned for the coming year.
In June, the Board of Supervisors voted to disband the Sheriff’s Cannabis Enforcement Team, a five-member unit that had conducted dozens of raids since 2018. Most team members have been reassigned. One deputy will continue working on cannabis-related felony warrants, and the remaining funds will be redirected to audits and compliance monitoring.
During that meeting, Board Chair Laura Capps sharply questioned Sheriff Bill Brown about a $19,185 monthly lease for the cannabis enforcement team’s headquarters in Santa Maria—stressing that it amounted to more than $1.2 million since 2019.
“It’s an alarming, eye-popping number that shows me I’m not sure we’re using these funds efficiently,” Capps said during a tense exchange, asking whether anything could justify such high rent.
Brown responded that the lease also covers space for narcotics operations and had historically been used to store seized marijuana. He noted plans to relocate to a smaller facility within six months.
The board also approved funding for the Immigrant Legal Defense Center, including two therapists to support families affected by deportation.
The Board of Supervisors has 90 days to respond to the report. While some of the Grand Jury’s recommendations are already being implemented, such as reducing enforcement spending, the report warns that broader structural changes are needed to stabilize the program’s future.
‘Green Rush’ Fades: Santa Barbara Cannabis Revenues Go Up in Smoke, Grand Jury Says News Channel 3-12.
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