LA pot shops owe 400 million in back taxes

[Hey Yo]

The dire financial status of the city’s cannabis stores — with more than 500 out of LA’s 738 pot companies owing outstanding taxes — has forced the city to take the extreme step of proposing an amnesty program to bail out the industry, according to a city letter obtained by SFGATE.

The LA Office of Finance is recommending that the city waive all tax penalties for cannabis companies in exchange for the businesses repaying their tax debts under payment plans, according to an Oct. 2 letter signed by Diana Mangioglu, the city’s treasurer, and sent to the LA City Council. Mangioglu said the program was necessary because of the “extremely challenging” business environment.

The LA cannabis market, which is the largest in the state, has been struggling for years. The city has failed to shut down a thriving illicit market, which has attracted customers to tax-free products, while legal shops are saddled with high taxes and regulatory costs. The overall tax rate for cannabis in LA exceeds 40% and includes a 10% local tax, one of the highest local taxes in the state. LA’s regulatory framework forced some business owners to spend over a million dollars on permitting and rent before they could open for business.

Cannabis industry advocates have long argued that the high tax rates businesses face are having an unintended effect of actually reducing the amount of tax revenue that governments can collect, as they are so high that they force businesses into failure. Statewide, total cannabis sales are falling, as operators owe $1.3 billion in back taxes to the state, according to a 2024 state report.

https://www.sfgate.com/cannabis/arti...n-21112945.php

[highwhey]

i thought those shops were printing money

[John8204]

i thought those shops were printing money

Sounds like they got hit by private equity real estate tipping point. This is the same thing that happens with restaurants. Trickle down economic devastation

[Norcaliblunt]

Sounds like taxes are bullshit. lol.