California’s cannabis industry is considered essential, but it’s struggling in the wake of the COVID-19 pandemic. It was already grappling with high taxes, soaring compliance costs and fierce competition from the black market.
Now, as our L.A. cannabis business lawyers can explain, companies are slated to receive a number of state benefits, and perhaps even federal aid in order to ensure their survival.
Marijuana Business Daily reports the state is planning to offer a number of extensions, relief and deferrals that should allow many pot shops, manufacturers and growers to keep operations chugging along and also meeting payroll. Many are hoping that this could ultimately lead to substantial, longer-term regulation – especially where taxes are concerned.
California Cannabis Tax Relief Measures
Among the relief issued by state tax agencies since early March:
- State tax return filings and payments less than $1 million have been extended until the end of July.
- Some tax interest and penalties will be forgive.
- There will be a two-month extension for filing annual reports, audits and refund claims and an additional two months to pay installment payments and annual fees.
- Tax appeals have been extended until the end of July.
- Sales and use taxes of up to $50,000 for businesses making less than $5 million in annual taxable sales has been deferred for a full year.
- The deadline for quarter taxes of businesses earning less than $1 million a year has been extended until the end of July.
For some entrepreneurs, this relief – which can amount to hundreds of thousands of dollars – is saving their businesses from going under. It’s even allowing some cannabis companies to invest in expansion, hiring and compliance.
It is a good idea to discuss these kinds of business plans with an experienced California marijuana business lawyer because such action will need to be strategic, particularly if the economy continues to fall or is slow to recover. If more Californians lose their jobs, it could result in prolonged revenue declines. With the black market factor still looming, it would make a lot of sense for the state to offer extended tax relief if they want to help the cannabis market from going under.
Federal Aid for Cannabis Companies Floated
More potential relief could come from the U.S. government – something that would be an unprecedented acknowledgement of the cannabis industry’s legitimacy from a system that still categorizes the plant and its derivatives as a dangerous, addictive Schedule I narcotic.
Legislation has been proposed by U.S. House Reps. Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO) that would extend eligibility of the Economic Injury Disaster Loans, the Paycheck Protection Program and other emergency advances to cannabis companies.
Marijuana shops have been conferred essential business status, which has kept them in operation for both medical and recreational sales. But despite the state tax relief, they haven’t been able to apply for aid or loans through the federal government’s programs even if they otherwise meet the requirements. That includes payroll protection.
As Perlmutter explained, cannabis companies are substantial local economic contributors throughout the country, and there is no legitimate reason they shouldn’t be extended the same relief as other businesses.
The bill has been titled the Emergency Cannabis Small Business Health and Safety Act.
For more information on how our L.A. cannabis lawyers can help you with business plans and aid applications, contact us for a free, initial consultation.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.
New bill calls for cannabis companies to be eligible for federal COVID-19 help, April 23, 2020, By Taylor Hatmaker, TechCrunch.com