Client has cultivation plus a separate extraction operation in the same building on one meter.
Extraction is, I think clearly, manufacturing. Biomass goes in, a distinct product comes out, the
process is mechanical and chemical. In this state manufacturing consumption of electricity is exempt
from sales tax if it exceeds a percentage threshold of total consumption at the meter.
Problem is the meter. Cultivation is the overwhelming majority of consumption and cultivation is
probably not manufacturing under this statute. So the extraction load, which would qualify on its
own, is diluted below the threshold by the cultivation load it shares a meter with.
Two paths. Submeter the extraction area and apply for a partial exemption based on documented
metered consumption, which the statute appears to allow. Or run a predominant use study and accept
that it fails.
Submetering costs maybe 6,000. Exemption is worth about 19,000 a year if granted. That is an easy
recommendation on paper but I want to know if departments actually honor a taxpayer-installed
submeter or whether they insist on the utility meter as the unit of analysis.
Extraction is, I think clearly, manufacturing. Biomass goes in, a distinct product comes out, the
process is mechanical and chemical. In this state manufacturing consumption of electricity is exempt
from sales tax if it exceeds a percentage threshold of total consumption at the meter.
Problem is the meter. Cultivation is the overwhelming majority of consumption and cultivation is
probably not manufacturing under this statute. So the extraction load, which would qualify on its
own, is diluted below the threshold by the cultivation load it shares a meter with.
Two paths. Submeter the extraction area and apply for a partial exemption based on documented
metered consumption, which the statute appears to allow. Or run a predominant use study and accept
that it fails.
Submetering costs maybe 6,000. Exemption is worth about 19,000 a year if granted. That is an easy
recommendation on paper but I want to know if departments actually honor a taxpayer-installed
submeter or whether they insist on the utility meter as the unit of analysis.