California recoups tiny portion of $14M in back taxes owed by these cannabis businesses

The inequity appeared stark in Los Angeles on Feb. 16, as the state retrieved a little over $2,000 from a public auction selling property belonging to cannabis businesses owing $14.4 million in back taxes, the California Department of Tax and Fee Administration reported.

The California regulatory agency retrieved $2,075 in proceeds from the auction, featuring items ranging from cash drawers and glass bongs (water pipes) to a sandwich board and even a snow cone-making machine, according to the state.

The 10 undisclosed businesses with property auctioned off are located in Southern California and considered “non-compliant” with taxes owed, the agency reported. The auction proceeds will be applied to the outstanding balances and allocated to the sales and use tax coffers or the cannabis tax fund, depending on which tax the business owes on.

Demonstrating its latest crackdown on tax default, the state indicated its goal of the auction is to “level the playing field for legitimate businesses” that pay up, the state agency added. The state has conducted 2,200 inspections of cannabis operations and seized $90 million in products and cash since the program began in the last few years, according to the tax agency.

Since 2022, the cannabis industry has struggled to remain profitable amid its complaints over high taxes and an unfair fee structure that businesses claim make it hard to compete with unlicensed, illicit operations, cannabis stakeholders have contended.

Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. She can be reached at 530-545-8662 or susan.wood@busjrnl.com