Here in California there are 15 agencies that are involved in the regulation of the cannabis industry. What makes things even more difficult is that the rules are constantly changing. This regulatory environment requires a detailed and daily compliance plan managed and maintained by experienced professionals that is backed up with diligent and accurate record keeping. Failure to maintain compliance and records can result in serious tax and licensing consequences and can subject you to penalties and interest.
Risk Of Operating In The Gray Market.
For those cannabis businesses operating without the proper state and city licenses, beware that you are the first target of Federal AND State authorities. The authorities are using the same network that your customers are using to find you (social media, Weedmaps).
Churches & Indian Lands.
Marijuana dispensaries cannot bypass City and State laws by posing as churches. Once law enforcement gets wind of this, they will shut down the activity. Divine Church of Gardens in Laguna Beach was raided by police on January 12, 2018. Officers seized more than 20 pounds of marijuana and more than $3,000 in cash. Law enforcement did receive a tip from a passer-by of the location but they also noted that this business was listed on Weedmaps. Laguna Beach does not allow commercial cultivation, distribution and sale of recreational cannabis, which California legalized with the passage of Proposition 64 in November 2016. The Adult Use of Marijuana Act does allow cities to ban marijuana businesses, which Laguna Beach city leaders voted to do in April 2017. In contrast the Church of Huntington Beach which advertises as being under the authority of the Oklevueha Indian Tribe, does operate as a medical Marijuana dispensary which is permitted by the City Of Huntington Beach. Some argue that Indian reservations have a sovereign status exempting them from Federal and State laws. The Iipay Nation of Santa Ysabel after closing its failed 35,000-square-foot gaming hall in February 2014, transformed the vacant space into a high-tech medical marijuana operation and is leasing part of the property to growers who cultivate and distribute the drug to legal dispensaries throughout the state. The tribe is the first in San Diego County to embrace the marijuana industry. The Federal prosecutor’s office recently announced that it is aware of what the tribe is doing and has reserved the right to force shut down if appropriate. In contrast the San Diego County Sheriff’s Department said in a statement it does not license, inspect, or regulate marijuana cultivation on tribal lands.
Our cannabis tax attorneys bring mainstream tax experience to help our cannabis clients achieve and maintain compliance and protect their businesses. It is important that business owners receive guidance from board certified tax attorneys with specialized knowledge in the cannabis industry. Let us help you to ensure your cannabis business remains operational and you do not lose your license.
For more specific information for your situation, please click on each applicable link below:
Distributors – A cannabis distributor is a person who procures, sells, and/or transports cannabis between licensed cannabis businesses, such as a cultivator, manufacturer, or retailer.
Retailers – A cannabis retailer is a person who sells cannabis and/or cannabis products directly to a consumer.
Cultivators – A cannabis cultivator is a person who is in engaged in the business of planting, growing, harvesting, drying, curing, grading or trimming cannabis.
Manufacturers – A cannabis manufacturer is a person who produces or prepares cannabis or cannabis products at a fixed location, that packages or repackages cannabis or cannabis products, or labels or relabels its container.
Having access to a Board Certified Tax Attorney-CPA with specialized knowledge in the cannabis industry and more than 30 years of experience in advising businesses in tax compliance and planning, accounting systems and cash management can help you meet your challenges to minimize your taxes and conduct business in a manner that avoids prosecution by the Federal authorities and meets State & Local laws and regulations to ensure your cannabis business remains operational. Don’t delay call us today!