Articles Tagged with California cannabis business lawyer

With the state substantially altering its cannabis tax structure, the California cannabis industry is expected to get a substantial tax break, which lawmakers are hoping will boost the legal industry left lagging by competition with illicit sales, extensive bureaucracy, and heavy taxation. cannabis tax lawyer

If the effort is successful, there is a potential for its impact to be global, given that California’s marijuana market is not only the oldest but the largest in the world. Thus, its influence across the industry is oversized.

The taxation changes will effectively erase a tax on cultivation of marijuana (which had been the source of about 15 percent of state marijuana taxes – roughly $166 million as of last year). The changes were part of a larger state budget agreement, which is also going to carve out some tax credits for certain marijuana companies, as well as expand labor rights in the industry and switch collection of a state excise tax from distributors to retailers. The tax will be paused at 15 percent for three years, at which point the state will have the option to raise it again to make up for revenue lost by ending the tax on growers.

Programs that benefit from marijuana taxes include youth and environmental programs, and the state says it must balance out these needs with those of marijuana cultivators and shops that are burdened by heavy taxes and tight regulations. As our Los Angeles marijuana business lawyers are aware, many companies are treading water – if they aren’t drowning – because they’re in direct competition for sales with black market dealers that can sell their products more cheaply because they aren’t taxed or responsible for screening their supply for harmful contaminants. This year especially has been tough, given last year’s bumper crop contributing to oversupply.

Many smaller operators are likely to fail or consolidate before the tax credit goes into effect, but it’s nonetheless a welcome windfall for those in the industry. It’s been largely recognized as an operational burden, as it was paid out by growers prior to obtaining any revenue for sales. So even if that product never sold, cultivators were still getting taxed. Continue reading

Laws pertaining to cannabis trade samples and medical marijuana donations have been recently updated in California. Marijuana businesses would be wise to review this changes with their Los Angeles cannabis lawyer to ensure their company processes and practices are aligned with the letter and intent of these laws. Los Angeles cannabis business lawyer

Let’s start with trade samples. These are samples of cannabis plants or products that are sent to cannabis licensees by producers, processors, wholesalers, and holders of hemp certificates to create brand and product awareness. It’s considered a solid means to generate more business. Trade samples allow products to be sampled, tasted, and smelled by licensed business buyers. An example would be marijuana producers who sell immature plants to other producers. Prospective buyers may want to know what kind of strain those immature plants are going to ultimately produce. A trade sample can show them. Similarly, producers could send samples to retailers to convince them to stock their product. Other industries have engaged in this for eons, but there has been some question about how those in the California cannabis industry could not only do it lawfully, but without having to pay the hefty taxes associated with retail sales.

Now, with the passage of AB 141 (a large piece of legislation that went into effect Jan. 1, 2022), cannabis products can be designated as trade samples from one licensee to another for marketing purposes. This will allow them to bypass cannabis taxes they’d otherwise have to pay. Exempted exchanges will include all harvested cannabis that has been or will be designated as a trade sample, as well as all cannabis that is used to manufacture a cannabis product that is/will be designated as a trade sample. Furthermore, the cannabis excise tax won’t apply to product that is designated as trade and simply given to another licensee absent consideration. Continue reading

The importance of residency has become a complicated ongoing issue for marijuana business owners in the state ofcannabis regulation Washington, where requirements for marijuana businesses are strict, yet muddled. What started as a residency restriction meant to control big outside mega corporations from putting local businesses at a disadvantage has led to corporations researching ways to exploit residency loopholes and limiting who longtime residents can bring on as partners. Now, due to unclear definition of what qualifies a person for residency, some are concerned how to prove their status.

You see, according to RCW 69.50.331(1)(b), one must be a resident of the state for six months to apply for a marijuana business license. Not only that, all members of the business, no matter how small the stake, must meet the same residency requirement. Further, a “partnership, employee cooperative, association, nonprofit corporation, or corporation” must be formed in Washington according to state laws and meet the above outlined residency requirements in order to be issued a license. Lastly, licensees must comply with residency requirements throughout the duration of the license. Without a firm definition on what constitutes residency, though, some businesses have been in the lurch. Continue reading

A new first for cannabis businesses recently took place, with the first initial public offeringcannabis business on a U.S. stock exchange by a marijuana producer. Ontario, Canada-based cannabis conglomerate Tilray went public on New York NASDAQ recently. The stock price spiked 30 percent in one day proving what we have been saying all along: cannabis is very, very good for business. According to a report from Quartz, investors rated the value of Tilray at time at $2.65 billion. Continue reading

It’s time for California to take a serious look at taxes that state and local governments are imposing on cannabis cannabis business lawyersbusiness owners. Some legislators agree, but others think the higher taxes should stand, at least for a while longer. For now, the current tax rate will remain, as an assembly bill addressing cannabis taxation failed to advance out of committee, according to an Associated Press report.

AB-3157 seeks to amend The Control, Regulate and Tax Adult Use of Marijuana Act, which currently sets the excise tax rate at 15 percent of the average market price. The new proposal would drop the excise tax rate to 11 percent and suspend the cultivation tax, with each expiring June 21, 2021. Right now, when excise and cultivation taxes are combined with sales tax, county, and city taxes the total tax rate can be almost 50 percent. Some fear this high of a tax rate is driving people to purchase marijuana on the black market, instead. There is some compelling evidence to back that claim. Continue reading

The Adult Use of Marijuana Act ensured that the State of California would begin issuing cannabis business licenses no later than January 1, 2018. The state is working feverishly to meet this deadline. Nevertheless, it is a massive undertaking which will require the coordination of hundred of employees at dozens of state agencies. These include: the Bureau of Medical Cannabis Regulation within the Department of Consumer Affairs; CalCannabis within the Department of Food and Agriculture; the Office of Medical Cannabis Regulation within the Department of Public Health; and the California Department of Technology.

cannabis business lawyer

While it remains to be seen exactly when cannabis business licenses are issued, the state has taken an important step toward implementing an efficient licensing system. Government Technology reports that the state has selected software from Accela, Inc. to manage licensing for the cannabis industry. State Chief Information Officer Amy Tong says the software was chosen due to a competitive price quote, ease and flexibility of use, and its successful history within the industry and other state licensing entities. While this successful history does bode well for cannabis business licensing, it is, of course, no guarantee of success in meeting the state’s January 1 deadline.  Continue reading

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