There is an exciting thing brewing in California that could be a lifesaver for many people on the West Coast. The California Cannabis Industry Association, alongside the coalition of cannabis industry leaders, businesses, and organizations, strongly support SB 827 budget and fiscal review committee. What does this mean? How will it affect the cannabis industry? Where is the future heading with this? Tony Frischknecht answers these questions and more in this brief yet timely episode, preparing you of what’s ahead should this new development provide the much-needed tax certainty for licensed cannabis businesses.
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The Lifesaver Bill In California That’s Providing The Much-Needed Tax Freeze For Cannabis Businesses
Welcome to the special bonus edition of Plant Problems. The reason why I’m putting this bonus edition out is because there are some time-sensitive material here that I believe is helpful to a large part of the cannabis community, if not all of it. I would love to get some of your information, or not just information. I’d like to understand how you guys are working with 280E and some tax strategies that you’ve been using. If you guys could please reach out to me at my LinkedIn, Tony-F2020, that’s my LinkedIn handle. I’d love to hear what you guys are doing in order to take the most advantage of our tax code and also not overpay, which 280E does for most of you out there. Please reach out to me at LinkedIn and give me some of your info. I’d love to share it with some of the folks here. You’d be helping out the cannabis community method you’re using. Some types would be awesome. I wanted to share that to you before we start the episode.The SB 827 bill neither increases nor decreases taxes but will freeze the existing rate upon which state tax taxes cannabis. Click To Tweet
Moving forward here, I came across something that’s happening in California. This could be a lifesaver for a lot of people that are on the West Coast. I feel if it works for them, you’re going to start seeing that spread across the US, which is huge. The SB 827, notice of support, “The California Cannabis Industry Association alongside the coalition of cannabis industry leaders, businesses and organization, strongly support SB 827 Budget and Fiscal Review Committee. The Budget Trailer Bill on cannabis among its provisions, this bill will provide much-needed tax certainly for licensed cannabis businesses, January 1, 2021.” They are proposing this bill. What’s amazing is they’re looking at a tax freeze. They don’t want anything to change. They’re looking at freezing it. This is for one year. The California Department of Tax and Fee Administration or CDTFA authority to increase the existing cannabis tax rates including the wholesale markup rate used to calculate the excise tax.
The bill also prohibits the CDTFA from increasing the cultivation tax rate for inflation unless the adjustment is for an inflation rate that is less than zero. To be clear, this bill neither increases or decreases taxes but will freeze the existing rate upon which state taxes cannabis. If you’re not already, you’re going to be looking at people that are already going to try to raise taxes on cannabis. One of the big reasons is, if there are projections that they’re not hitting in your state or city, they’re going to get pressure from their constituents saying, “We pass this cannabis thing. We’re not making any money.” Their natural way of fixing this is. “Let’s raise the tax on the cannabis industry.” All of us know that that is detrimental to keeping up and beating the black market. That’s what a lot of this is. For those of you that have been in this for a while, it’s a constant fight. It never changes. It keeps coming.
This allows you guys some stability. If you see a massive state like California, which is the 9th biggest in the world’s economy, you’re going to start seeing that trickle across the rest of the US. What I’m asking for you guys is to support your friends out in California. If they are not aware of this, please make them aware of this and say, “I heard about this SB 827.” If you guys are able to start getting a buzz around this right now, especially with the way the political system is, we’ve got so much stuff going on. People are not going to be paying attention to this. You guys in the cannabis world must be focusing on stuff like this, along with figuring out who you’re going to vote for this November 2020. Make this a priority, guys. This is important stuff. This is the stuff that I hope I can bring something to you that you can use. This is very useful stuff. Get in touch with anybody in California. There are different association groups out there that you can reach out to and say, “How can I help support this bill?”
If we are able to create a buzz around this, especially on the social media side and start passing this around to all our friends in the industry, this is going to be helpful for everyone. This was my bonus session. I hope it brings you some value. Please, as I said, reach out to me at LinkedIn and tell me different ways that you’re trying to combat and be ahead of 280E because I’ve gone and talked to about 280E a lot because I know how valuable and how it’s destroying our cannabis businesses. We want them to grow and thrive. Let’s look into stuff like this that’ll help at least freeze things for a baseline for California and for future States that are going to go recreational. This will be something that they’ll base their systems off of, which is helpful to the new guys that are coming up. Thank you. I can’t wait to talk to you guys again and I will see you soon.