Cannabis growers who used to be legally registered with Calaveras County have initiated a court action to get back $16.3 million in Measure C taxes and fees, which they claim were illegally collected because none of the growers were registered with the state when the taxes and fees were collected in 2017.
Representatives of Golden State Herb, Inc. and Rainbow Trees & Trading, LLC, want to see their complaint recognized as a class action lawsuit so that as many as 700 growers who were legally registered with Calaveras County can join the lawsuit, Crystal Keesey, chief financial officer and secretary for Golden State Herb, said Wednesday.
There have been five other lawsuits filed on behalf of Calaveras County cannabis growers since a ban on cannabis cultivation for commercial purposes was adopted by the Board of Supervisors in January, Trevor Wittke with the Calaveras Cannabis Alliance said Wednesday.
“Calaveras County jumped the gun,” William G. Panzer, an Oakland-based attorney helping represent the growers, said Wednesday. “The way this is different from the other lawsuits is we're suing for return of the tax money and the registration money. We're also asking for punitive damages.”
Keesey said Golden State Herb is a statewide company that used to have a farm in Burson. It was an outdoor 22,000-square-foot grow on 10 acres that ceased operations in November 2017.
California Business and Professions Code says only state-licensed businesses can be taxed by local jurisdictions, including individual counties, Keesey said in a phone interview.
“State licenses did not come into effect until January 2018,” Keesey said. “All the Measure C taxes were collected prior to January 2018.”
Keesey and people with Rainbow Trees & Trading, LLC, Panzer and other lawyers with Henry G. Wykowski & Associates of San Francisco are calling their legal filing a civil class action lawsuit and they filed it Aug. 3. Calaveras County staff have been served, Keesey said.
Megan Stedtfeld, county counsel, said Wednesday the county had not yet been served, and therefore she could not comment about it. Tim Lutz, county administrator, did not respond to a request for comment Wednesday.
Panzer and Wykowski state in their 14-page complaint that they are requesting return of $12.3 million in Measure C taxes and $4 million in fees collected in 2017 from cannabis cultivation businesses that took part in the county’s now-defunct Commercial Cannabis Urgency Ordinance Registration Program.
Calaveras County and the Board of Supervisors are named as defendants in the legal filing.
According to Panzer and Wykowski, cannabis farmers in Calaveras County were mandated by local statute to register with the county under their Urgency Ordinance to be eligible for state licensure when California began its regulatory program in 2018.
The suit alleges Measure C taxes collected from registered farmers under the county’s short-lived foray into regulating commercial cannabis, were prematurely charged. Governing state law authorized local jurisdictions to collect local taxes from state licensees only, Panzer and Wykowski argue on behalf of growers. There were no state licensees in 2017 when Measure C taxes were collected.
Measure C, which asked whether cannabis growers should be taxed, was passed by 67 percent of Calaveras County voters who went to the polls in November 2016.
Calaveras County required registered farms to follow a specific and strict set of rules to operate, Andrew Greer, chief executive officer with Golden State Herb, Inc., said in a statement.
“This suit asks that Calaveras County be held to the same standard for following the law in the Business and Professions Code of the State of California,” Greer said. “This is a case of taxation without representation. It is time for light to be shone on the bait and switch of the Calaveras County Commercial Cannabis program.”
The first court hearing for this latest cannabis-related legal filing is scheduled Dec. 5 in Calaveras Superior Court.
Wittke with the Calaveras Cannabis Alliance said Wednesday two lawsuits citing the California Environmental Quality Act filed on behalf of formerly registered growers have been dismissed on procedural grounds.
“We believe the court is in error in the decision because our dismissal was literally copy and pasted from the other CEQA lawsuit which was substantially different from the Calaveras Cannabis Legal Defense Fund lawsuit,” Wittke said Wednesday. “We have requested the court reconsider their decision to provide a rationale for their decision matching the facts and the law as argued in our motion.”
Two other lawsuits alleging unlawful takings from formerly registered cannabis growers have been consolidated and a preliminary hearing is scheduled to be heard at the end of this month, Wittke said.
There is also a lawsuit on behalf of formerly registered growers that alleges Brown Act violations by the Board of Supervisors and county staff. The county has not replied, Wittke said, and the litigation is still pending.
Contact Guy McCarthy at firstname.lastname@example.org or 588-4585. Follow him on Twitter at @GuyMcCarthy.