More than 13% of California’s legal cannabis retailers, or about 265 storefronts, missed a tax payment deadline of May 1 and are facing hefty fines, SFGate reported this week.
The California Department of Tax and Fee Administration told the news outlet that’s how many marijuana retailers are delinquent in remitting cannabis taxes, and now those businesses face penalties of up to 50% on taxes that are paid late.
The number of delinquencies is almost sure to rise as well, since the agency told SFGate it’s still processing tax returns.
A debt bubble has been slowly growing for the California cannabis supply chain, with some estimating it at upwards of $600 million. The CDTFA disclosed in December that the industry as a whole already at the time had a ballooning $250 million tax bill.
Cannabis industry attorney Michelle Mabugat told SFGate she expects a lot of California companies to go under this year as a result of the widespread financial distress.
“I do anticipate a lot of retailers going out of business this year, just like we saw a lot of cultivators go out of business last year,” Mabugat said.