Long Beach, California is developing ways to teach local residents how to responsibly consume cannabis without getting behind the wheel. Given that cannabis sales in Long Beach contributed more tax revenue in 2022 than oil, it’s a big facet of the city and leaders hope to keep cannabis use safer. 

The City of Long Beach announced that its Department of Health and Human Services was awarded a $285,000 grant from the California Office of Traffic Safety (OTS) through the National Highway Traffic Safety Administration to educate locals about responsible cannabis use and its goal to reduce cannabis-impaired driving related collisions.

“This grant fuels the City’s ongoing effort to keep everyone on our roadways safe,” said Mayor Rex Richardson. “It’s important that people get informed. This means, the public should know that driving under the influence includes cannabis, illegal substances, and even some medications.”

The Health Department’s GreenlightLB Program will utilize grant funds to support activities that aim to educate community members about the dangers of driving while impaired by cannabis and drugs, as well as promote safer choices, including safe driving behaviors. The funding will be allocated to support several activities between Oct. 1, 2023, and Sept. 30, 2024, including the following:

• DUI-Drug prevention workshops for high school and college age students to address the risks of driving while impaired and promote the use of transportation alternatives.
• Community partnerships to advance health equity through bilingual and bicultural workshops on drug-impaired traffic safety.
• E-scooter/E-Bike campaign to remind users that riding under the influence is both unsafe and against the law.
• Peer-to-peer youth program to empower youth to actively promote traffic safety.
• Collaboration with dispensaries to educate consumers about safe and responsible cannabis use and the risks of cannabis-impaired driving.
• Enhanced drug-impaired driving awareness through print and digital media resources and coordination of Long Beach Safe Streets Awareness Week.
• Pop-up events that promote the importance of safe and responsible driving.

“Our top priority is the safety of our community,” said Acting Health Department Director Alison King. “The efforts funded by OTS allow for evidence-based programs to increase awareness and help everyone make informed decisions and eliminate drug-impaired driving in Long Beach.”

What Long Beach is Doing to Promote Safety

The city has been busy with initiatives to promote safety. Last year, the program reached 2,000 community members via the following methods:

• 35 drug-impaired driving community presentations and youth-focused workshops.
• 16 educational outreach tables and pop-ups to promote safer driving.
• The graduation of 14 students from across five Long Beach schools for the Safe Streets Ambassador program.
• Co-hosting the fourth annual Long Beach Safe Streets Awareness week.
• Conducting the annual city-wide cannabis and health assessment.

“Getting in a vehicle remains one of the most dangerous things we do,” said California Office of Traffic Safety Director Barbara Rooney. “We must continue to work with our partners to shift that realization and make traveling on our roads safer.”

It marks the seventh year the city’s Health Department has received an OTS grant for these purposes. The activities funded by this grant are in line with the Health Department’s plan to further develop a safe approach to responsible cannabis use. GreenlightLB’s program activities are also designed to advance goals identified in the City’s Safe Streets Action Plan to eliminate traffic-related deaths and serious injuries by 2026.  

Long Beach Lowers Taxes

Last April, the city announced it would lower cannabis tax rates in an effort to generate more revenue.

The Signal Tribune reported that after the Long Beach City Council unanimously approved the tax rate change, the Office of Cannabis Oversight began to establish a plan to lower taxes for recreational and medical cannabis use. The lower tax rates will be established as part of the city’s 2024 annual budget. 

“We should be aiming to create a positive feedback loop: reduce the tax burden on local operators, allow them to be competitive and expand their businesses, while rewarding those high road employers and operators who make investments back into our community, all while nurturing a new revenue source for the city,” said Councilmember Joni Ricks-Oddie.

Long Beach is home to 32 retail cannabis stores and 37 cultivators. Since recreational cannabis use became legal in California in 2016, the tax rate in Long Beach was set at 8% for adult-use sales, 6% for medical-use sales, 1% for lab testing receipts, as well as $13.70 per square foot of canopy under cultivation. There is also a 10.25% general sales tax in California. 

Lowering cannabis tax rates is expected to cause an increase in legal cannabis sales, designed to attract people avoiding taxes.

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The Arkansas Medical Marijuana Commission (AMMC) recently announced the benefits that the state’s medical cannabis program, with millions of dollars in cannabis tax funds helping to provide lunches for kids at school.

While the state has collected $115 million from cannabis taxes, $87 million went toward free or low-cost lunches for children. AMMC spokesperson Scott Hardin explained the breakdown. “A billion dollars has been spent to purchase medical marijuana but what that means for the state is that we’ve collected 115 million dollars in state tax revenue,” Hardin told ABC 7. “From that $115…$87 went to [University of Arkansas for Medical Sciences] specifically as they tried to obtain that National Cancer Institute designation. Now there’s a change. Now that funding is going to go specifically to food insecurity.”

The “low-cost” part of this means kids are paying very little for food. “What that’ll mean is, if someone is on a reduced school lunch, if they are now paying 50 cents to a dollar, that medical marijuana revenue steps in and pays that to ensure that a student gets that for free,” Hardin explained. “So really students in the state will be not having to pay whatever that burden is. 50 cents, a $1.50 to have reduced school lunch so it really is, it’s affecting Arkansans in a positive way.”

The state currently only has eight cultivators and 38 dispensaries, which Hardin said is plenty of storefronts to serve patients and address the current growth pattern. “Unless something changes, unless voters go back to the polls and either accept a modified program or a recreational program or something that’s really where we are,” he said. “The industry itself, you’re not going to see more dispensaries opening up all over the state. You’re not going to see more growers but what we are seeing is more patients. At the beginning of the year we had 89,000 patients. Now we are pushing 100,000.”

Current data, updated as of Dec. 9, shows that there are 98,099 patients with active medical cannabis ID cards. According to Hardin, the industry has far outpaced initial projections that the state’s mature market would only have approximately 50,000 active cardholders.

The most recent sales data for November 2023 shows that the state collected $257 million. Arkansas’ medical cannabis program launched in May 2019, and between then and October 2023, the state has collected a total of $988.3 million in sales. The combined sales per year breaks down sales from 2019 ($31.2 million), 2020 ($181.8 million), 2021 ($264.9 million), 2022 ($276.3 million), and 2023 ($234 million, but only between January 2023-October 2023).

According to a report from the Arkansas Times, the more accurate number for total sales since medical cannabis began has already surpassed $1 billion. “We’re totally confident we’ve surpassed that,” Hardin said.

According to Arkansas Cannabis Industry Association executive director, Bill Paschall, reaching that $1 billion mark is a sign that cannabis is doing a lot for patients in Arkansas. “It underscores the growing acceptance and recognition of the therapeutic benefits of cannabis and the commitment of the state’s medical cannabis licensees to providing safe, quality and innovative products that meet patients’ needs,” said Paschall. “The men and women employed by the marijuana industry look forward to continuing to positively impact the lives of Arkansans and contributing to the evolving cannabis landscape.”

Arkansas isn’t the only market hitting $1 billion for cannabis sales. A recent report shows that Arizona’s recreational cannabis market has also hit $1.1 billion in sales, but includes sales data from just 2023 (specifically, January 2023-September 2023). Arizona’s overall sales data shows a total of more than $billion since it began sales in January 2021.

In legal news, an Arkansas judge ruled in September that the 2018 Farm Bill takes legal precedence over the state’s ban on hemp-derived cannabinoid products like delta-8. Act 629 of 2023 that passed earlier this year banned delta-8, delta-9, and delta-10 THC products. The lawsuit was filed by four companies (Bio Gen LLC, Drippers Vape Shop LLC, The Cigarette Store LLC, and Sky Marketing Corp) whose lawyers alleged that the ban would harm their businesses. “Plaintiffs have been, and will be, harmed by Act 629, as they are unable to transport in and through Arkansas hemp-derived cannabinoid products that have been declared legal under federal law,” the lawsuit stated.

According to the Arkansas Times, a different ongoing case involves if restrictions on advertising for cannabis businesses is unconstitutional. The lawsuit was filed in 2022 by Good Day Farm, which argued that advertising restrictions violate its right to protected commercial speech. Circuit Judge Chip Welch heard arguments earlier this month, and plans to issue a ruling by the end of the year. Attorney General Tim Griffin already stated that he plans to appeal the decision, if Welch decides to rule in favor of advertising being too restrictive.

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Nova Scotia-based Canadian cannabis advocate Chris Enns has been targeted by the Canada Revenue Agency (CRA) audit, which claims that Enns didn’t report $2.5 million in taxes from illegal cannabis-related income. These numbers come from decade-old data between 2012-2014.

According to CBC.ca, Enns is described as being at “the forefront of the medical marijuana movement in Halifax,” and well-known for his advocacy efforts. He told the news outlet he is being targeted by the CRA unfairly, claims that the CRA’s numbers and data are inaccurate, and that he has no unreported sales.

In March 2023, the CRA created an Illicit Income Audit Program to counter both money laundering and other illegal activity conducted by organized crime groups. CBC.ca reports that the program includes 80 auditors to target illegal businesses. Between April 2023-August 2023, the CRA shared that 90 audits were labeled as complete, with a total of $74 million discovered in unreported income, as well as $24 million taxes owed and $7 million penalties issued.

The CRA describes Enns’ case as “unique,” and the Tax Court of Canada claims that Enns “deliberately structures his finances so that the government cannot determine the taxable income of his businesses and himself.”

The Minister of National Revenue initially confirmed a tax reassessment, which showed that $2.5 million was allegedly missing and unreported from between 2012-2014. Additionally, $654,000 in “gross negligence” penalties were issued to Enns. Enns appealed the decision two years ago, but there is currently no appeal date.

The case targets Enns and 59147 Nova Scotia Ltd., which controls operations for the Grow Shop, an industrial park in Dartmouth, Nova Scotia. The business primarily sells gardening supplies and hydroponic equipment, while a different business that Enns owns is the Halifax Compassionate Club (a non-profit dispensary), as well as the Farm Assists Cannabis Resource Centre.

The CRA alleges that the Halifax Compassionate Club never filed any tax returns or any other documents required by non-profit businesses. Additionally, it claims that because Enns manages all businesses through “59147 Nova Scotia Ltd.,” the records are “unreliable.” “Enns attempted to structure his business affairs so that expenses are claimed, but revenue sources are either not reported or under-reported,” a government statement said in reply to Enns’ appeal.

CBC.ca believes that Enns’ is being targeted because he was arrested on trafficking charges when police raided his cannabis businesses in 2013 and 2014. According to Illicit Income Audit Program director general, Eric Ferron, auditors often use “indirect verification methods” to come up with income data. This includes analyzing bank and credit card records, and various assets (ex. a luxury vehicle) to determine evidence of business income through illegal methods. The CRA has the ability to seize future wages and assets, and also put a lien on a property. “It is difficult, but it is the right thing to do,” Ferron said. “At the end of the day, we want to promote tax fairness, and we also want to disrupt illicit financial flows. People shouldn’t profit from illegal activity, and people should pay their fair share of taxes.”

In the past, Enns has fought for medical cannabis patients access to medicine and improved legislation to protect and serve patients. As a result, his record includes numerous arrests for cannabis-related offenses. Enns told CBC.ca that the “many criminal proceedings” he has endured have made record-keeping difficult, but he’s working on updating all of his records. Additionally, he shared that his only asset is a 13-year-old Honda Civic. “The CRA is basing its assertions on documents that were developed in the process of a criminal prosecution that was withdrawn by the Crown,” said Enns. “Not only were the numbers in the document artificially generated, but the document itself is being used improperly by the CRA.”

According to CBC.ca, the CRA has used such methods to target illegal activity for almost 100 years. One example from 1926 shows the U.K. Judicial Committee of the Privy Council ruled that an Ontario “garage owner” was trafficking liquor and was forced to pay income tax on illegal sales.
In 2019, Enns’ dispensaries were raided by law enforcement, who seized 50 pounds of cannabis, numerous kilograms of extracts, edibles, and also cash. Later in October 2021, Enns defended himself in front of Judge Elizabeth Buckle, claiming that his rights were violated. In an interview with SaltWire Network on the same day, Enns explained his defense and the case’s conclusion. “Well, for the purposes of the application that was before the court today, it was a simple and straightforward section, a challenge where I made an argument that the actual information that was contained in the affidavit that the police used in order to go before a justice of the peace and request a warrant to search the business locations, was simply not sufficient, and did not contain any credible evidence that a justice of the peace could reasonably have used in order to justify the issuance of that warrant,” Enns said in the interview. The judge ruled that law enforcement cannot use online resources such as Weedmaps to justify a search warrant, and the case ended.

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Executives from a Massachusetts-based cannabis company dressed in colonial garb aboard a ship in Boston Harbor on Wednesday to protest an IRS rule that requires regulated marijuana companies to pay taxes that are significantly higher than businesses in other industries. The demonstration, which evoked the legendary Boston Tea Party at the same site 250 years ago, was orchestrated by licensed cannabis company MariMed to protest 280E, an IRS tax rule that is the bane of state-legal cannabis companies from coast to coast.

Lucas McCann, the chief science officer and a co-founder of cannabis compliance consulting firm CannDelta, explained how the IRS rule that prohibits most standard business tax deductions affects companies in the regulated cannabis industry.

“Section 280E of the Internal Revenue Code is a daunting hurdle for cannabis businesses, including retail dispensaries. In short, 280E is a code used to make cannabis businesses less profitable by making them pay more of their overall profits in taxes,” McCann, who was not involved in Wednesday’s protest, writes in an email. “Rooted in the 1980s, this outdated tax legislation was crafted to prevent drug dealers from claiming any business expenses on their taxes. In a modern twist of coincidence, today’s cannabis businesses operate legally under state law but are still treated as illicit businesses, federally speaking, because cannabis is still listed as a Schedule I substance.”

Protest Evokes The Boston Tea Party

Wednesday’s protest re-enacted the famed Boston Tea Party of 1773, when colonists protested high taxes levied by the British Crown on tea shipped to the New England colonies. In an act of independence-minded defiance, members of the group the Sons of Liberty, some disguised as Native Americans, boarded ships moored in Boston Harbor and dumped chests of tea into the water to protest the high taxes.

MariMed’s demonstration resurrected themes from the protest 250 years ago, this time featuring executives from the company dressed in period clothing aboard the Liberty Star, a schooner adorned with banners protesting 280E. Brandishing boxes emblazoned with the word “weed,” the costumed protesters shouted slogans as they boarded the ship and heaved the chests into Boston Harbor. In a statement, the company noted that the boxes were empty, made of natural wood and promptly retrieved from the water. 

“As a Boston-based multi-state cannabis operator, MariMed protested in a way that would make the company’s Patriot ancestors proud – by paying homage to the most famous tax protest in history during the year of the Boston Tea Party’s 250th anniversary,” the company wrote. “By shining a light on Section 280E’s negative financial impact on legal cannabis operators, MariMed hopes to effectuate policy change geared towards industry growth and advancement.”

Jon Levine, the CEO of MariMed, said that the demonstration was a way to draw attention to the tax rules, which negatively impact patients and consumers and threaten to cripple businesses in the regulated cannabis industry. He also called for an end to 280E for businesses operating in compliance with state law.

“Section 280E is unfair and hampers companies striving to make cannabis accessible for consumers and medical cannabis patients in all legal states,” Levine said in a statement from MariMed. “It should be repealed. Doing so would remove an obstacle to our mission to improve people’s lives every day through cannabis.” 

But eliminating the tax rule is easier said than done. A legislative repeal of the rule is required, but so far, bills to reform the federal government’s policy on cannabis have not specifically addressed 280E. The comprehensive legalization of cannabis would make the rule a moot point, but that solution is unlikely to come anytime soon.

“There are several bills that have been floated in D.C., but none to our knowledge that includes language about eliminating 280E,” Levine said in a statement to High Times. “The most likely path to the elimination of 280E is for cannabis to be rescheduled or de-scheduled altogether. President Biden has asked the Department of Health & Human Services for an opinion about that, but nothing’s happened yet. Just another example of the slog in D.C. as it pertains to federal cannabis reform.” 

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New Jersey Governor Phil Murphy this week signed legislation to grant standard business tax deductions to licensed cannabis companies in a move designed to improve the viability of the state’s regulated marijuana industry. The measure, which decouples New Jersey’s tax laws from Section 280E of the federal tax code, was signed by Murphy on Monday following passage of the bill by the state legislature in February.

In many states that have legalized cannabis for recreational or medical use, tax laws follow the lead of Section 280E of the federal tax code, which denies most standard business tax deductions for cannabis businesses. Under the rule, cannabis operators are only allowed to deduct the cost of goods sold, while deductions for other standard business expenses such as rent, payroll and utilities are not allowed for most businesses.

The bill from Democratic Assemblymembers Annette Quijano, Clinton Calabrese and Linda Carter was passed by the New Jersey General Assembly on February 27. An identical companion measure, sponsored by Democratic state Senators Troy Singleton and Shirley Turner, also passed in the state Senate on the same day by a vote of 32-3.

Under the new legislation, which goes into effect immediately and applies to tax years beginning on January 1, 2023, cannabis companies will be permitted to deduct certain business expenses on their state tax returns. The bill does not affect the federal tax liability owed by the businesses. The sponsors of the legislation say that the bill will help improve diversity in the regulated cannabis industry, which faces steep barriers to entry and high taxes and regulatory fees.

“We have seen here in New Jersey, and around the country, that legal cannabis businesses tend to lack diversity both in gender and race amongst its ownership ranks,” Singleton said in a statement quoted by local media. “This law aims to level the playing field for all cannabis businesses.”

“It will ensure that dispensaries are paying a fair amount of taxes by taking into account critical business expenditures and allowing these deductions from their income,” he added.

“New Jersey’s cannabis industry is still in its infancy, and we need to act early to provide equal opportunity for all businesses to succeed,” Turner said. “Supporting dispensaries while promoting diversity within the cannabis industry is better for our local economy and also helps to ensure that the profits from recreational cannabis are being funneled back into the communities that need it most.”

The legislation to grant standard business tax deductions to New Jersey cannabis companies is also supported by representatives of the regulated cannabis industry, including the New Jersey Cannabis Trade Association (NJCTA), a trade group that said the legislation “will provide a more economically viable landscape for our young industry and those wishing to enter it.”

“The continued implementation of 280E placed several financial constraints on cannabis operators, big and small, by prohibiting them from deducting common business expenses from their taxes,” the NJCTA said in a statement. “Now, New Jersey’s licensed cannabis operators will be treated like any other legal enterprise operating in New Jersey, a sense of normalcy that our industry will cherish.”

James Leventis, executive vice president of legal, compliance & government affairs for Verano, a company that operates three Zen Leaf dispensaries in New Jersey, applauded the passage of the new legislation, saying it eliminates “a key barrier that has impeded entrepreneurship and the growth of the cannabis industry across the nation.”

“It’s inspiring to see New Jersey take this bold step to support one of the fastest-growing industries in the nation,” Leventis wrote in an email to High Times. “I hope to see similar courageous action by leaders across additional states – and, most importantly, at the federal level – to deliver further cannabis reforms that will allow our industry to finally reach its full potential as a catalyst for positive economic and social progress across the U.S.”

Other states that have legalized marijuana including New York, California, Hawaii, Michigan, Colorado and Oregon have passed legislation to separate their state tax laws from Section 280E. Similar legislation is pending in Connecticut.

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The ”ISIT420″ plate went for $6,630 in last year’s auction, adding to almost $50,000 in total proceeds for disability services in Colorado.

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New York is poised to collect $1.25 billion in revenue from taxes on legal cannabis sales, according to a budget projection from Democratic Governor Kathy Hochul released on Tuesday. The revenue projections are included in the state budget for next year, which includes significant investment in projects designed to continue the economic and social recovery from the ongoing coronavirus pandemic.

“We have the means to immediately respond to the COVID-19 pandemic as well as embrace this once-in-a-generation opportunity for the future with a historic level of funding that is both socially responsible and fiscally prudent,” Hochul said in a statement from the governor’s office.

New York’s state budget for the 2023 fiscal year, which is detailed in an 85-page briefing book from the governor’s office, anticipates $56 million in cannabis revenue, including $40 million collected from license fees on cannabis businesses. State lawmakers legalized recreational cannabis last year, and since taking office in August Hochul has vowed to expedite the regulation of adult-use cannabis stalled by Andrew Cuomo, the former governor who resigned last summer because of a sexual harassment scandal.

Over the next six years, the governor’s office predicts that the state will collect more than $1.25 billion in revenue from taxes and fees on recreational cannabis, with the annual total increasing as more producers, processors and retailers launch their operations. Cannabis tax revenue is expected to increase to $95 million in fiscal year 2024 and reach an estimated $363 million in 2028.

New York Budget Projections Include Revenue from Cannabis ‘Potency Tax’

The taxes on New York’s cannabis industry include a nine percent excise tax and another four percent tax for local governments. The state’s regulations also include a separate tax on THC, with the amount of tax collected rising as the potency of a product rises.

David C. Holland, a New York attorney with extensive experience in cannabis policy and law, says that the “THC potency tax at first seems like the state gouging revenue but, in fact, some view it as being an ingenious, recession-proof tax for the state to receive predictable revenue.”

Holland explained that the tax on THC is levied at a rate ranging from $0.005 (one-half of a penny) per milligram of THC up $0.01 (one cent) per milligram, depending on the form of the cannabis product (i.e. dried flower, extracts or edibles). For example, an edible with 10 mg of THC would be assessed a tax of 10 cents, while a 100mg edible would be taxed one dollar. The THC tax is levied on wholesale transactions, when products are transferred from distributors to retailers.

Holland, who is also the co-founder and president of the NYC Cannabis Industry Association, noted that the tax on THC provides the state government with a revenue stream that is not dependent on the ups and downs of the economy.

“What makes it recession-proof is that the price per pound of cannabis, whether $1,000 in times of shortage, or $200 in times of surplus is irrelevant—the tax on potency remains a constant due to the THC concentration of the raw or processed product, and that tax is uniform across all product lines,” Holland wrote in an email to High Times.

“As such, the tax is really a more predictable revenue source for the state and insulates it against the boom-and-bust cycles of crop cultivation and the idiosyncrasies of market consumers in the forms of cannabis they choose.”

Revenue raised by the nine percent state excise tax will be divided among several social programs, with 40 percent going to education, 40 percent to community reinvestment, and the remaining 20 percent devoted to substance abuse treatment. Income from the additional four percent tax will be shared by local governments, with counties receiving 25 percent and 75 percent going to cities, towns and villages. 

The launch date for legal sales of adult-use cannabis in New York has not yet been determined, but is expected to come later this year or in early 2023.

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California Governor Gavin Newsom indicated on Monday that he is open to making changes in the state’s taxation of the legal cannabis industry and urged local governments to allow legal cannabis companies to operate in their jurisdictions. After releasing a state budget proposal for the 2022-2023 fiscal year, the Democratic governor told reporters that regulatory changes could support California’s legal cannabis industry while curbing the illicit market.

“It is my goal to look at tax policy to stabilize markets; at the same time, it’s also my goal to get these municipalities to wake up to the opportunities to get rid of the illegal market and the illicit market and provide support and a regulatory framework for the legal market,” Newsome said at a press conference on Monday, and added, “We have a lot of work to do in this space and this year I’m looking forward to working directly with the legislature on reforms.”

Last month, dozens of activists and licensed cannabis operators sent a letter to Newsom warning of a potential collapse of California’s regulated cannabis industry. The group argued that high taxes are making licensed businesses unprofitable and promoting competition from illicit operators. 

In the budget proposal, the Newsom administration projects that the state will collect $787 million over the 2022-2023 tax year, which represents a decrease of about $34.2 million compared to the 2021 state budget. The budget estimates that of the cannabis tax revenue raised, approximately $595 million will be available to fund substance abuse treatment, environmental remediation of illicit cannabis cultivation operations and activities related to public safety.

The proposed budget notes that the Newsom administration supports cannabis reform and plans to work with the state legislature to amend California’s tax policy. The administration also plans to continue developing a grant program “that will aid local governments in, at a minimum,  opening up legal retail access to consumers.”

“We’ve plugged in budget components on the basis of an estimate in January of $787 million, so any reforms need to consider the impacts to those categories of funding and investments, how that gets offset, and we augment that support,” Newsom said when asked to clarify the language in the budget proposal. “It should consider different components of the industry, and reformers have been offered a plug-in, and so I’ll just leave it at that except to say there was intention by having that language in the budget.”

California Budget Funds New Regulatory Proposals

The budget proposal allocates $13.6 million dollars to fund several proposals for the state’s Department of Cannabis Control, including $5.5 million to develop a unified single licensing system for future cannabis business licenses and the transition of existing licensing data. In addition, $2.2 million will be spent to create a data warehouse to store the department’s data, processes, and procedures to maintain data integrity, as well as data displays and visualizations for the DCC website. Another $6.1 million will fund a multi-year consumer awareness and safety education campaign.

Blake Schroeder, CEO of San Diego-based Medical Marijuana, Inc., applauded the budget’s investment in cannabis data and licensing systems. But he criticized the overall reduction in cannabis spending, saying “it’s a shame that funds that would typically ensure more public and environmental safety in the industry are being cut.”

“Cannabis has been wrongly deemed the ‘Wild Wild West’ many times before, but there are still safety precautions, and consequences for illicit operators, that must be enforced,” Schroeder wrote in an email to High Times. “We are excited by the state’s renewed commitment to cannabis awareness programs, as this is a large part of our mission as well.” 

But Danielle Dao, founder and co-CEO of California-licensed cannabis operator Eco Farm Holdings PBC, criticized the amount spent on regulators and called for cannabis tax funds to be spent to prop up licensed operators struggling with competition from the illicit market and local bans on cannabis commerce.

“Attempting to operate a cannabis business while 60 percent of the state is comprised of counties that have banned cannabis or created lengthy multi-year processes for licensure reflects a failure from the state to enact a functional supply chain,” Dao wrote in an email.

Before the California budget is finalized, state lawmakers will also submit a proposed budget this spring. Lawmakers will then hold a series of budget policy committee hearings before drafting the final budget bill, which must be passed by the legislature and signed by the governor to become law.

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The cannabis industry’s famed Emerald Triangle is made up of the lush growing regions in Mendocino, Humboldt and Trinity counties of Northern California—but high taxes and large corporations are threatening this community of multi-generational farmers who want to grow high quality weed as a passion, not just for profit.

One local Humboldt advocate and farm owner, Rose Moberly, is bringing awareness to the plight of the Emerald Triangle by circulating a petition to gain support.

Moberly has an impressive and extensive history working in the cannabis history. Starting from her roots interning for the Colorado Senate as an environmental lobbyist to rising in the ranks of a trimming job, grow facilities and even a track-and-trace METRC auditor, she’s explored many facets of the cannabis industry. Things really took off two years ago when she was invited to travel to California to educate small farmers about the track-and-trace system.

Ultimately, this path led her not only to find love, but also to her current role as co-operator of a second-generation farm called Huckleberry Hill Farms. “Long story short, I wound up falling in love with a certain legacy farmer [John Casali], who challenges me to be a better woman everyday, and I moved out [to Humboldt] over two years ago.”

Moberly describes Huckleberry Hill Farms “as mom-and-pop as it can get!” and her passion for cannabis advocacy and growing knows no bounds. However, small farmers in the Emerald Triangle are facing a dire situation. The tight-knit region of farmers are being challenged by corporations, who jumped onto the cannabis bandwagon once it hit mainstream popularity, without little effort in advocacy or legalization assistance.

“I think it’s important for people to realize where a multi-billion-dollar industry is being created from, and what they had to go through with the War on Drugs in order to legalize this amazing powerful plant,” Moberly told High Times.

More importantly, the shockingly high cultivation taxes that are required to grow in California makes operation difficult for all small farmers, not just those who operate within the Emerald Triangle region. If the current trajectory for taxes doesn’t change, it could be game over for small farmers everywhere. “All farmers no matter where they are in the state of California are suffering from over taxation and over supply,” she explained. “Together we need to communicate with regulators that if they are going to continue to permit farms without federal legalization, they will continue to drive the price down. The Emphasis on the Emerald Triangle has to do with protecting a culture that is not found anywhere else in the entire world, not just California.”

Moberly is confident that some of the nation’s best and most unique cannabis strains are bred in the Emerald Triangle, and if those farmers are forced to shut down due to exorbitant tax requirements, those strains could also disappear forever. “Furthermore, the Emerald Triangle is like the Amazon jungle of genetics. Some of the Legacy Growers here, I’m sure, hold a unique strain of cannabis that might even have the cure for cancer, or Autism, epilepsy, etc,” she said. “If those Farms aren’t able to make it in today’s climate some of those strains and cultivars might possibly be lost forever.”

Moberly shared that a recent local survey showed that 50 to 60 percent of cannabis farms won’t survive through 2022 if some kind of emergency regulations are put in place. Which is why she decided to take action and start the petition “Save the Emerald Triangle Legacy Cannabis Farmers.”

“As a result, farmers who sold flower products last year at $1,400 a pound are now forced to sell their products at $300 per lb to pay their bills,” she wrote on the petition webpage. “Due to the state’s fixed dollar tax, those farmers will be asked to pay a 53 percent cultivation tax of $161.28; while the remaining leaf product which some farmers had to offload as low as $15 per pound will be charged $48 per pound for state taxes. At that price, they’re being subjected to a 320 percent tax rate!”

With enough signatures, she will send a letter to California Governor Gavin Newsom, as well as state legislature, to plead the case on behalf of California farmers everywhere. In the meantime, you can help support the cause by visiting the petition here.

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A longtime Internal Revenue Service (IRS) official participated in a recent webinar where he made recommendations on how cannabis businesses can stay tax compliant.

The IRS Commissioner of Small Business/Self-Employment (SB/SE) Examination, De Lon Harris, participated in a PBC webinar on Wednesday, alongside PBC CEO and co-founder, Josh Radbod. There, he discussed the topic of how cannabis businesses can continue to be compliant, despite cannabis’ federal status.

“It’s really our mission at the IRS, not just with marijuana and cannabis industries, but with all taxpayers, to promote voluntary compliance,” Harris said during the webinar. “And that can happen in different ways. When most people think of the IRS, they think of examinations or audits and they think that’s the only way that we interact or try to promote voluntary compliance with taxpayers, but we do our fair share of outreach and education as well. Just like what we’re doing today.” 

The PBC Conference is a B2B event for “payments, banking and compliance in the cannabis industry.” Harris was also a keynote speaker at the PBC Conference in 2021, held on September 9-10, 2021. 

Harris also spoke of the IRS’ goal of reducing audits for the cannabis industry. “Regarding the cannabis marijuana industry, we developed a strategy that we hope will increase voluntary compliance and identify and address non-compliance when it’s there,” Harris said.

“Our focus is to positively impact filing and paying and reporting compliance on the part of all cannabis businesses to keep audits to a minimum.” On the IRS’ side, Harris noted that they seek to properly educate their examiners so they can conduct a quality examination, that the different sects of the IRS communicate properly with each other, and that they continue to partner with groups like the PBC to promote education.

As Radbod proceeded to ask Harris key questions during the webinar, he shared that cannabis statis as a Schedule I controlled substance doesn’t mean that taxes shouldn’t be paid. “As I’m sure you’re aware, and everybody listening, that a business engaged in the sale or production of marijuana or cannabis is considered illegal under federal law but nevertheless, it’s a business in every sense of the word, whether its categorized under federal statute as legal or illegal, it still remains to be obligated to pay federal income tax on the taxable income that it earns.”

The Internal Revenue Code 280E complicates matters, preventing businesses who sell cannabis from receiving tax deductions, even if those businesses operate legally in states that have legalized cannabis sales. However, that section does allow cannabis “to reduce their gross receipts by properly calculating a cost of goods sold to determine its income.” While a cannabis business can’t deduct advertising or selling expenses, it can reduce gross receipts, according to internal revenue code 471. 

Harris highly recommended that cannabis businesses strive to keep records of their receipts, canceled checks and any other documents that support evidence of income. “Well-organized records make it much easier to prepare the tax return, and to help provide answers if your return is selected by the IRS for an audit.”

Harris explained that all of this and more is available on the IRS website; however, users must search for “marijuana” in order to find information, rather than using the keyword “cannabis” for the time being. 

“So we’re making that change, but for now, you would type in ‘marijuana industry,’ and it would pull up the page that we give you information about, not only general information that would help you understand and meet tax responsibilities required by the cannabis industry, but the page which includes links to pages of more specific information,” he concluded.

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