Santa Barbara Cannabis Operators Could Feel the Heat from New Tax Law

Cannabis tax delinquents could lose their licenses if they don't pay their bills within 30 days.

Santa Barbara County’s Board of Supervisors is pursuing a strict policy to address tax delinquency within its cannabis industry.

In a recent decision, the board gave initial approval to a law that could shutter any cannabis business if they fail to pay taxes more than 30 days past the due date, SFGate reported.

The law is yet to become binding and awaits a second vote later this month. Still, the initial unanimous approval by the Board of Supervisors on June 27 showed a firm stance towards the industry that has reportedly struggled to maintain tax obligations.

According to Brittany Odermann, deputy county executive officer, county law currently permits marijuana farms to indefinitely delay payment on their quarterly taxes. The loophole has led to several instances of indebted operators paying taxes almost a year late. The new law proposes to revoke a company’s business license if it fails to pay a quarterly tax bill within a 30-day grace period, regardless of the company’s standing.

Supervisor Steve Lavagnino originally voiced concerns about the severity of the amendment, comparing it to a “death penalty”. However, he later voted in favor of the measure after it was clarified that companies would be given a 30-day grace period for tax payments.

Despite approving the measure, Supervisor Das Williams expressed reservations about the consequences of this regulation.

“This is a standard that nobody else lives by,” Williams said, implying that the strict tax payment deadline could potentially put many companies out of business.

“If we all lived by this standard…we would all probably lose our job at some point,” he added.

Santa Barbara County, home to one of the largest cannabis farming industries in California, charges cannabis cultivators a 4% tax on their business revenue. If approved, the new law will be effective as of Aug. 10. The measure’s final vote is scheduled for next week.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.


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