RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Glasshouse germinated? scopro: // "What is the rationale of charging cultivation tax on a space occupied by processing rooms and a dispensary."//
The don't charge out a dispensary as cultivation space (it is taxed separately), but they do charge out processing space as cultivation space.
They charge out not only the gross square feet of your building, but also any outdoor spaces of your site that you are using to make the facility work (cooling towers pads, tank pad, electrical pads, loading docks, etc.)
Following is the City code which defines what part of your cultivation facility is taxed (all).
3.48.020 (D).
//" Cannabis cultivation space" means the gross square footage of any building, facility or site where cannabis cultivation and related activities occur. Cannabis cultivation space includes, without limitation, areas used for growing, planting, seeding, germinating, lighting, warming, cooling, aerating, fertilizing, watering, irrigating, tipping, pinching, cropping, curing or drying cannabis, and areas used for storing products, supplies or equipment related to any such activities."//
Municipalities can structure their taxes however they like and a business can take it or leave it. Sunniva took it hook line and sinker.
// "I assumed a cultivation tax per sq ft applied to canopy space only"//
A: The thing to do when investing is to research rather than assume.
B: There were plenty areas of the state where Sunniva could have located that DO tax only on canopy space - but they went the expensive route instead.
For instance, the County my license is in charges $1.50 sf for comparable cultivation space. This would seem like a real bargain at only 1/10th of what CatCity charges.
Look deeper however and you find that our County not only charges that rate just for canopy, but ONLY for mature canopy (flower rooms). Immature canopy areas (cloning areas, nursery areas and vegetative rooms) don't get that charge. Since a total facility SF is usually 2-3x the space of the flowering rooms, this means that Sunniva is paying around 25x the cultivation tax that is paid in my county. (and my energy costs are ~25% of CatCity)
Think about that 25X. That means they could have cut what is a $50 million per year expense by $48 million.
Sunniva chose to locate in (one of) the most expensive areas to cultivate in the State, and competitors would have eaten their lunch because high operating costs are death in any business. Since they also chose one of the most expensive areas to construct a facility, they didn't even make it to the finish line before going broke.
A single critically bad decision doomed them. Location, location, location.