Los Angeles Considering ‘Amnesty’ Program for Cannabis Businesses That Owe Back Taxes
- Los Angeles cannabis businesses owe the city about $400 million in back taxes and fees, but the proposed amnesty program would collect only around $30 million by waiving late fees and interest for payments made within three years.
- The city council unanimously voted to direct the Office of Finance to draft language for the amnesty program.
- Of the roughly 700 licensed cannabis businesses, over 500 owe taxes, penalties, and interest totaling approximately $417 million as of December, with only about $150 million collectible due to legal limits and closed businesses.
- The collected funds under the program would be split: 20% to the city’s general fund and Office of Finance, 40% to law enforcement for illegal cannabis enforcement, and 40% for social equity grants to cannabis operators.
Cannabis businesses in Los Angeles, California, owe the city about $400 million in back taxes and fees, but under an “amnesty” program proposed by the city council, only about $30 million would end up in city coffers, the Los Angeles Times reports. The program would allow businesses that pay their back taxes within three years to avoid paying late fees and interest.
The council on Tuesday voted unanimously to ask the Office of Finance to draft language to create the program.
According to an October Office of Finance report outlined by the Times, more than 500 of the roughly 700 licensed cannabis businesses in the city collectively owed about $400 million in taxes, including $100 million in penalties and $35 million in interest. That total increased to $417 million in December.
However, only about $150 million of that is collectable as some debts are outside the three-year statute of limitations, and some of the businesses have shut down, the report says.
Under the amnesty program, about 20% of the revenue would go to the city’s general fund and the Office of Finance; 40% would be earmarked for the city police department and attorney’s office for illegal cannabis enforcement; and the remaining 40% would fund social equity grants to cannabis operators.