IRS Official Gives Marijuana Businesses Advice On Tax Compliance

Members of the marijuana business community in Oakland, California are calling on state and local officials to provide “tax amnesty” after numerous cannabis companies were robbed earlier this month.

At a press conference on Monday, the Oakland-based association Supernova Women urged officials to deliver financial relief after more than 25 licensed marijuana businesses were burglarized or robbed during the week of November 15.

Specifically, the non-profit group wants to see a repeal of the state’s cannabis cultivation tax and a “significant reduction” in the excise tax on marijuana products. They say that would help sustain small and minority-owned firms that are facing up to $5 million in losses following the robberies.

“All types of licensed cannabis businesses were impacted—cultivation, manufacturing, distribution and retail, delivery and storefront,” Amber Senter, executive director of Supernova Women, said at the press conference. “The cannabis industry needs tax relief.”

“Cannabis equity businesses in particular need more money and resources. Small businesses and small farmers need help,” she said. “Piling on and increasing taxes—and now with the threat of robberies and violence—is proving to be unbearable for cannabis operators. When we’re faced with targeted attacks, the effects are magnified. Our communities do not have the runway for robberies and tragedies of this time.”

Raeven Duckett, a social equity licensee who founded Text Johnnie, emphasized that “cannabis companies operating in Oakland pay at least a 6 percent tax rate while other non cannabis companies pay 0.12 percent—so cannabis companies are paying 600 percent more taxes than any other Oakland company.”

“Yet when organized crime organizations target at our facilities, we get little to no response and zero compassion from local law enforcement and city officials,” she said. “Our businesses are hurting. These operators are scared. These operators deserve the right to a safe work environment and local support in a city where we pay an exorbitant amount of taxes.”

Across the bay in San Francisco, activists have similarly criticized the police response to marijuana burglaries. Surveillance video from earlier this month that was obtained by The San Francisco Chronicle showed local police apparently observing and not intervening as suspects got away after they responded to a 911 call about a dispensary being burglarized.

State officials say they understand where the activists concerns are coming from and said that changes to laws might be needed to make it easier for businesses victimized by robberies to get relief.

“We appreciate hearing from and deeply sympathize with cannabis operators impacted by the recent increases in organized cannabis theft,” Nicole Elliott, director of the California Department of Cannabis Control, told Marijuana Moment. “Though state law does not require excise and sales tax to be paid on stolen goods, the complexities of the current cannabis tax structure mean that, in practice, it can be difficult for retailers to recover those taxes.”

“We encourage businesses to focus their advocacy on addressing the broader cannabis tax challenges and engage with their state legislators on policy proposals to reform and simplify California’s cannabis tax structure,” she said. “A 2/3 vote is needed to amend the law related to cannabis taxes so any changes will require a collective effort.”

When a theft of cannabis occurs, a retailer seeking a refund of taxes needs to work with a distributor to amend relevant tax filings. Unlike other systems where tax is due only at point-of-sale, California’s cannabis tax process—where retailers must pay estimated excise tax to distributors, who then remit the payment to state tax authorities—is relatively long and cumbersome, and requires arduous record keeping.

Senter ended Monday’s event with a clear message to city and state officials: “Listen to us. This is our cry for help. Help us.”

“We’re not going to hire people with AK-47s and put them on the roof. That’s not our job,” she said. “That’s not why we started to sell weed. We didn’t decide to get into cannabis to kill people. We’re here to provide medicine and improve people’s lives.”

Prior to the spate of cannabis-related robberies, California Attorney General Rob Bonta (D) celebrated the 25th anniversary of the state’s move to legalize medical cannabis and described today’s market as “number one in the world.” However, he did acknowledge that more work needs to be done.

Separately, California officials started accepting concept proposals last month for a program aimed at helping small marijuana cultivators with environmental clean-up and restoration efforts.

Gov. Gavin Newsom (D) did veto a bill last month that would have allowed cannabis businesses to advertise on billboards along most highways in the state.

The governor also recently approved a bill to boost the state’s hemp industry by legalizing retail sales of a wide range of consumable products derived from the plant—including CBD-infused foods, beverages, cosmetics and dietary supplements. It will also eventually allow the sales of smokable hemp products in the state.

In September, Newsom signed separate legislation to require hospitals to permit medical marijuana use by certain patients in their facilities.

California officials are also making millions of dollars available for grants programs to support marijuana social equity initiatives and assist localities in processing pending cannabis business license applications.

Next year’s California State Fair will host a first-of-its-kind, state-sanctioned cannabis competition.

Marijuana Had ‘Unprecedented’ Success In State Legislatures In 2021, NORML Report Shows

Photo courtesy of Mike Latimer.