Tax revenue from cannabis seems to be dropping in Santa Barbara County, and the costs of managing the industry soon could outpace the amount of money that it brings in.

A report from the Santa Barbara County Civil Grand Jury found that the cost of the county’s cannabis enforcement could become a financial burden in the future.

“While initially the county received a ‘green rush’ of cannabis tax revenue, that revenue has since declined steadily from its high of $15.7 million in 2020-2021 to less than $6 million in 2023-2024,” the report stated.

The report added that the county will need to make “corrective measures” to avoid dealing with increased costs and issued recommendations on how to proceed.  

Santa Barbara County draws in revenue by taxing the gross receipts of cannabis nurseries, distribution, manufacturing and other operations. The county approved the growing of cannabis in 2018, believing it would bring in additional income, but revenue has steadily dropped after a strong start.

According to a staff report presented to the Board of Supervisors on Tuesday, the county collected $870,841 in revenue during the third quarter of the 2024-25 fiscal year. The revenue is reported four times a year.

The report shows that the current income from cannabis is 11.5% lower than what was projected. The county adopted a budget expecting $6.1 million in cannabis revenue, but it revised the budget after a new projection showed income was closer to $5.4 million.

Brittany Odermann, the deputy CEO for the county, said the county was aware of issues in cannabis enforcement and the drop in revenue. She said the county had already taken steps to adjust its budget and enforcement policies.

During the county’s annual budget meetings, it was shared that the cost of cannabis enforcement was $3.3 million. The annual salary of a single deputy was $242,000. 

The Board of Supervisors reduced the number of sheriff’s deputies on the county’s narcotics team. Even though Sheriff Bill Brown wanted four deputies assigned to the team, the board approved two and approved funding for a position with different duties. 

An example of how the county adjusted its enforcement policies is making background checks less restrictive for operators, in alignment with the state rules.

The decisions to reduce enforcement staffing and lower the projected tax revenue were made before the Grand Jury released its report. Odermann said the county’s actions show they are aware of the issues the cannabis industry is facing. 

“In that way. it’s a good news story. Their findings, I think, are very accurate, but we’ve also been working on addressing these over the last few months,” Odermann told Noozhawk.

Odermann said part of the reason for the decrease in revenue seems to be more supply than demand. When the county first started allowing cannabis operations, staff had planned for a higher demand and revenue.

In a report to the Board of Supervisors, Odermann said the market prices seem to have stabilized but are lower than when cannabis was first legalized. The drop in prices is not unique to Santa Barbara County and appears to be a trend for most counties in the state.

“There’s a general agreement across the state of California that … this is kind of where things are going to be for a little bit based on supply and demand,” Odermann said. “So, they are not as high as they once were, but they’re not as low as they dropped in (2022-23). We stabilized on that.”

During her comments on the report, Second District Supervisor Laura Capps acknowledged the Grand Jury report and said the county will respond fully in the future. However, she added that the county’s recent actions show it is aligned with the report’s findings.

The county on Tuesday praised the work of the 2024-25 Grand Jury and held a swearing-in ceremony for the 2025-26 members.