Los Angeles Marijuana Dispensaries

July 12, 2023

Navigating the Impact of IRS Code 280E on Legal Cannabis Businesses

Introduction:

In the ever-evolving landscape of the legal cannabis industry, businesses face a unique challenge when it comes to taxes. The Internal Revenue Service (IRS) Code 280E has significant implications for cannabis businesses, placing them in a distinctive position compared to other sectors. In this blog post, we delve into the effects of IRS Code 280E on legal cannabis businesses and explore the challenges and strategies for navigating this tax provision.

Understanding IRS Code 280E:

August 25, 2020

The Legal Complexities of California Contract Cannabis Farming

By Cannabis Law Group

As longtime Los Angeles cannabis business lawyers, we recognize that there are significant legal barriers to entry in California’s legal marijuana market. For this reason, an increasing number of smaller farmers are jumping on the bandwagon of something called “contract cannabis farming.” This is a common practice in mainstream agriculture that is just starting to gain steam in the cannabis market. Los Angeles cannabis contract lawyer

These types of contracts diverge from the normal model of cultivation employment, and they can even vary significantly from contract to contract. Basically land owners gain the appropriate cultivation permits from local and state authorities. From there, they contract with experienced cannabis crop growers who conduct the actual farming. Many of these farmers are legacy growers who weren’t successful in landing their own state cultivation permits due to so many barriers to entry. The land owners and the growers then split the profits. Additionally, farmers get their foot in the door of an industry they may not have otherwise. That could result in more opportunities down the line.

Cultivation contracts vary in length and scope, but they typically last a year or so, but some continue in perpetuity until one or both parties dissolves the relationship. Neither should enter such an agreement until having it carefully examined by a California cannabis business lawyer experienced in contract drafting and review. The importance of this is underscored by the fact that there have been numerous lawsuits stemming from these arrangements, with allegations including fraud, breach of contract and labor law violations. Continue reading

March 7, 2020

California’s Legal Cannabis Market Dogged by Industry Divisiveness and Illicit Competition

By Cannabis Law Group

California’s cannabis industry is sitting on a not-so-well kept secret — that many of its licensed, above board, legal business operators have also traded unlawfully, at some point, and to one extent or another. marijuana business

As many industry insiders have echoed, anyone turning a profit in this new era, has to have at least one hand in unregulated dealings. Chris Coulombre, CEO of Pacific Expeditors in Sonoma, has said “I have to imagine that 60 percent of the market overall is probably playing in a parallel markets, but I don’t think they enjoy that. It’s truly a decision of necessity.”

Whispers of retailers selling counterfeit products are rife. Cultivators are known to sell unregulated product on the side. But how can we blame them? Suffering terribly at the hands of price undercutting from illegal competitors, these unregulated exchanges are all taking place in hopes of keeping doors open, and businesses afloat. Continue reading

November 23, 2019

Prayer and Pot: California Cannabis Church Wars Still Being Waged

By Cannabis Law Group

The illicit marijuana market is the bane of every legal operator’s existence. Illegal dispensaries outnumber lawful ones 3-1 throughout California, and state officials have committed themselves to cracking down hard on unlicensed operators. But what happens when its faith – not funding – that drives these operations? Los Angeles cannabis church lawyer

The idea of cannabis as a religious sacrament isn’t new. Numerous religions – historically and presently – have used cannabis as an entheogen to induce a spiritual experience. Courts, however, haven’t always been so kind.

Last year in Indiana, for example, a judge ruled that a local First Church of Cannabis would not be legally allowed to use marijuana as a religious sacrament, finding it would be impossible to battle illicit drug trade “while allowing a religious exception that would be ripe for abuse.”

But in Indiana, unlike in California, possession of non-medicinal marijuana is still illegal. But as our Los Angeles cannabis church lawyers know, that doesn’t mean cannabis churches here are exactly safe – especially if they’re operating without licensed approval from the state. Continue reading

October 11, 2019

Old Marijuana Convictions be Gone, Thanks to California Program

By Cannabis Law Group

cannabis lawyer A California-developed online tool, called ‘Clear My Record,’ which helps people with eligible convictions clear their criminal records, is set to change the lives of hundreds of thousands of Americans previously convicted of marijuana related crimes.

In 2016 when Californian voters legalized marijuana, state officials hoped to reverse decades of marijuana convictions. Especially convictions making it difficult for people to secure substantial employment. And particularly because those affected most disproportionately by marijuana criminal convictions hail from low-income minority groups.

Now, thanks to a new technology, California prosecutors can quickly overturn or lessen approximately 220,000 old marijuana convictions.
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August 5, 2019

Growing Pains for California’s Weed Tracking System

By Cannabis Law Group

In January, the state of California kicked off an online rollout of its marijuana inventory tracking system. At a glance, marijuana businesses across the Golden State appear to be successfully reporting product inventory each day, via the California Cannabis Track-and-Trace (CCTT) system. But not without some growing pains.

To start, the idea of tracking marijuana traveling throughout the supply chain sounds simple enough. In theory, all cannabis products would be given unique identification numbers, noting from which ‘batch’ or ‘lot’ they were born. Products would then be sent to labs for testing. Next, approved products would be passed from producer to distributor, and finally to retailers for sale. At each step, the state should be able to track each piece of marijuana as it moves through the chain, making sure nothing is being redirected out of state, and ensuring everybody is paying their required taxes.

California Cannabis Lawyers

But in practice, a few hiccups quickly come to light. First up, only businesses holding ‘provisional’ or ‘annual’ licenses are required to subscribe to the track-and-trace system. And until last month, there were more than 600 marijuana businesses operating on ‘temporary licenses,’ who would not have had to track-and-trace. This means, there was no way regulators could comprehensively account for every legal product moving about the state.

August 3, 2019

California Cannabis Growers at Pains as License Renewals Drag

By Cannabis Law Group

California marijuana farmers are facing a crisis. Currently, all 9,464 state issued temporary cannabis cultivation licenses, have expired. Meant to be replacing those, for businesses continuing to meet the required regulations, are either provisional or permanent annual cannabis business licenses.

The catch though, the California Department of Food and Agriculture (CDFA) is yet to show its ability to approve those provisional or permanent licenses, at the same pace applications are being lodged.

California Cannabis License Attorney

The backlog on approvals may be due to the complexity of the licensing application process itself. Tellingly, by mid July 2019, only 2,053 provisional licenses and 230 permanent licenses had been granted. As it stands, when applying for prospective licenses, cannabis farmers are expected to demonstrate compliance with the stringent California Environmental Quality Act (CEQA), as well as submit:

Background checks;
Surety bonds;
Real property documents;
Detailed site plans;
Farm management practices;
Waste management protocols;
Security procedures; and
Pesticide measures.

July 31, 2019

California Clamps Down on Black Market Pot Operations

By Cannabis Law Group

As the black market for pot sales shows little sign of slowing, Californian authorities have notably increased enforcement action against illegal cannabis traders. Over the last 12 months, raids by law enforcement on black market pot businesses have increased threefold, when compared with similar activity conducted in the year prior. As a result, unlicensed pot growers and sellers have seen a total of $30 million worth of cannabis products seized. But even amid this additional ramp up, cannabis industry insiders say even more activity is needed to curb illegal pot sales across the Golden State.

For context, in 2018 local law enforcement worked in conjunction with the state Bureau of Cannabis Control, and together they served six unlicensed cannabis businesses with search warrants. These raids resulted in the seizure of more than 1,500 pounds of marijuana, said to carry a street value of $13.5 million.

Calilfornia Cannabis Business Licensing Lawyers

Comparatively, according to data release in July, within the first half of 2019 alone, the bureau had already served 19 search warrants to unlicensed sellers. Those raids were successful, and saw more than $16.5 million worth, or about 2,500 pounds of illicit marijuana, confiscated. Just shy of $220,000 cash was also seized from cannabis businesses operating illegally during this time.

July 29, 2019

Investment Interest in California CBD Companies is Rising

By Cannabis Law Group

California cannabidiol (CBD) products are on the map, and investors are taking notice. But given that CBD-infused products are still relatively new to market, regulators continue to closely review the category. For this reason, acquisition strategies may be a ways off yet, but industry insiders predict consumer companies will see high minority investment interest in the short term.

CBD is naturally found in cannabis plants, and is widely known for its relaxing properties. But CBD won’t produce a ‘high,’ as it lacks the psychoactive tetrohydrocanabidiol (THC), found in marijuana. CBD-derived products have quickly grown in popularity, thanks largely to a wide range of potential health benefits, including relieving pain, anxiety, seizures and brain injuries.

California Cannabis Investors

According to Michael Lux, partner at Crowe accounting firm, the next 6-12 months will involve strategic minority investments in the CBD space. He noted too that while the majority of CBD companies are of interest to investors, they are still less than five years old, so they’d likely need a little more time before preparing to engage in full exit strategies.

July 25, 2019

Los Angeles Marijuana Industry at Boiling Point

By Cannabis Law Group

cannabis defense lawyers Ever since cannabis was legalized in California in January 2018, a flood of marijuana businesses have opened, hoping to take their share of the pot market. But it’s no secret that many industry stakeholders are unhappy with the current state of affairs.

Today there are 182 licensed marijuana dispensaries operating throughout Los Angeles, and many of those business have paid well into the tens of thousands of dollars to operate legally. First by registering their companies and covering licensing fees, then paying city taxes and continually meeting strict safety standards imposed by the state.

Meanwhile, there are countless other outfits operating slightly more under the radar. They are able to skip paying licensing fees and, as predominantly cash run businesses, also avoid paying taxes. To the frustration of legal business owners, rouge pot shops attract a slew of customers with undercut pot prices, prices that legal outfits have a hard time matching given their higher operating costs.

While regulation of cannabis use and sale continues to undergo assessment and tweaking in the state of California, many licensed cannabis business owners have reached boiling point. The biggest reason, illegal pot shops continuing to operate comfortably, with little pressure from state authorities requiring them to toe the line.
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