California marijuana business lawyers

February 11, 2019

California Cannabis Companies Lament Cash-Heavy Practices With Tax Season in Full Swing

With tax season in full swing, the deadline approaching April 15th, California cannabis companies and growers are hauling in piles of cash to government offices to ensure their taxes are paid. However, neither those firms or government employees are keen on dealing with the archaic process of hand-counting dollars. Yet as our California cannabis business attorneys can explain, these tax woes are indicative of the long-standing and much bigger problem: Marijuana businesses can’t access banking. California cannabis company lawyers

Despite the fact that now 10 states plus the District of Columbia have marijuana legal for recreational purposes (1 in 4 Americans lives in a state where recreational use is legal), the federal Controlled Substances Act that still designates marijuana as a Schedule I narcotic means banks are reticent to get involved. Doing so could risk the U.S. Department of Justice coming after them for money laundering. Recently, The Modesto Bee reported the U.S. House of Representatives intends to hold hearings on bills that, if passed, could allow marijuana companies easier access to banking services – some six years after states started legalizing the plant for recreational use. It’s not the first time the issue has been raised, but it had always stalled in the past with Republicans being the Congressional majority – even when, as recently as 2017, the House bill had 95 bipartisan co-sponsors and a sister measure in the Senate had 20.

Lawmakers from Colorado and Washington are sponsoring a new marijuana banking bill that cannabis lawyers in Los Angeles know could help these companies – and government workers – avoid the risk of carrying around large cash stashes that may make them vulnerable to criminal targeting. As it now stands, the California Tax and Fee Administration already has to expend substantial resources to carefully plan for cannabis company tax payment drop-offs. In Humbolt County, where a large number of marijuana growers operate, the tax collector’s office has invested in numerous cash-counting machines, which so far have helped to processed some $10.3 million in marijuana tax revenue. Statewide, officials collected nearly $230 million in tax revenue from the marijuana industry in the first nine months of last year. Little less than half of that was reportedly submitted via cash payment. Continue reading

December 16, 2018

More California Marijuana Products Passing Stringent Safety Tests

By Cannabis Law Group

More California marijuana products are passing rigorous safety standards imposed by state law, though Orange County marijuana business attorneys know the the abrupt closure of a state-approved laboratory found to have fallen short in checking for pesticides has some Orange County cannabis companies scrambling to ensure they’re meeting state guidelines. california marijuana lawyer

Earlier this year marked the beginning of broad legalization of marijuana in California, but strict testing of pot products was mandated by state officials beginning July 1. Eight weeks into that testing and one-fifth of all marijuana products were failing those standards. By November, however, California’s Bureau of Cannabis Control reported the testing failure rate fell to roughly 14 percent. That still means approximately 24,000 marijuana items for sale never made it to store shelves.

Among those items reportedly having the highest failure rates were cannabis-infused:

Candies
Cookies
Tinctures (concentrated herbal extracts)

Those items on their own had a fail rate of about 26 percent over the summer, though this was still an improvement. Previously, the fail rate of these processed marijuana products had been about one-third. Continue reading

December 1, 2018

Credit Union Offering Marijuana Businesses Checking and Savings Accounts

By Cannabis Law Group

Banking for marijuana businesses has been fraught with legal perils. As Los Angeles marijuana business attorneys can explain, this stems primarily from the fact that no matter how many states allow marijuana, the Department of Justice continues to consider the drug unlawful according to federal law, which puts banks in the legal cross-hairs, thanks to money laundering statutes. That’s why despite being a multi-billion dollar industry, only 30 percent of cannabis businesses have access to banking. cannabis attorney blog

That may be changing, though the pace will truly depend on how aggressively the federal government pursues violators pursuant to federal law. The Anchorage Daily News reported a credit union plans to launch a pilot program intended to extend banking and checking services to marijuana-related businesses that otherwise operate largely in cash. As noted by the credit union’s CEO, the lack of financial services for cannabis companies has resulted in essentially a cash crisis for marijuana businesses as well as a safety issue for local communities, as these locations may be targeted for strong arm robberies.

Alaska, like California, allows marijuana cultivation, sale and possession for recreational purposes, and has done so since 2014. Yet as retailers have cropped up throughout the state, they face problems similar to those in this state, which is they must operate in cash and owners have even had their personal bank accounts abruptly closed. The credit union says it hopes to address this market need and also improve community safety by giving cannabis companies another option besides cash-only operation. Just in Alaska alone, the industry is handling some $1.5 million monthly – all in cash, according to local media. Continue reading

November 30, 2018

U.S. Tax Court to California Cannabis Business: You’re Still Drug Trafficking

By Cannabis Law Group

Although California cannabis business attorneys know significant strides have been made with regard to legitimization of California’s marijuana industry, a ruling by the U.S. Tax Court underscored once again that until there are significant changes at the federal level, marijuana businesses are still illegal drug-smugglers under the eyes of the law. Orange County marijuana lawyer

In Harborside Health Center v. Commissioner of Internal Revenue, what is admittedly one of the largest marijuana dispensaries in California – and possibly the U.S. – requested the usual tax deductions that any legitimate business owner might seek. It also sought to be treated just like any other corporation because it abides the law in California, as our California cannabis business lawyers know many such distributors in the state do, and federal prosecutors opted not to take any type of civil forfeiture action against the firm.

The IRS, however, sees it much differently. In the eyes of federal law, as long as the U.S. Controlled Substances Act remains in place (designating marijuana as a Schedule I narcotic), the IRS sees Harborside (and presumably others like it) nothing more than a large drug trafficking ring, not entitled to those deductions or even allowed to capitalize indirect costs into its inventory, and further subject to potentially millions of dollars in penalties for taking several contrary positions on tax returns from 2007 through 2012. Continue reading

October 22, 2018

California Marijuana Business Lawyers See Cultivation Take Root on Central Coast

By Cannabis Law Group

Situated right between the two biggest cannabis consumer hubs of Los Angeles and San Francisco, the Central Coast of California is poised to become potentially one of the core producers of the plant statewide (or nationally, though interstate sales are barred). This fertile region has long been ripe with vineyards, renowned for producing some of the country’s best wine. Orange County marijuana business lawyers understand that as cannabis cultivators have been cropping up in the spaces between, many farmers are beginning to see it not so much as competition but as a chance to reinvigorate the agricultural traditions that have lagged in recent decades. From Santa Barbara County to Monterey, more marijuana farmers have been licensed in the last year than anywhere else in the nation. Still, this promise is tempered by concerns that explosive unchecked growth could lead to serious problems. California marijuana business attorney

To be sure, the Emerald Triangle region of Northern California (comprised of Trinity, Mendocino and Humboldt Counties) grows the most marijuana by volume, hence the nod to greenery in its new moniker. However, if the pace of cannabis farming keeps up at the current clip, the Central Coast could soon surpass the northern neighbor region. And the region has a unique advantage over the Emerald Coast: No deep roots in the gray or black market.

Our Orange County marijuana business lawyers have been at the forefront of this industry, which has ballooned to an estimated $4 billion-a-year, and climbing. It’s been beneficial to the local tax base and also presents a new wave of opportunity for agricultural entrepreneurs seeking a legally sound yet lucrative opportunity. While the new law hasn’t entirely erased the stigma surrounding marijuana, the Central Coast lacks the cumbersome challenge of working to bring into compliance well-established underground growers transitioning into above-board – but heavily-regulated -operations. The risk of government raids is much lower (though not erased completely), but so are the profits, whittled by expensive new mandates and taxes. Operational, financial and legal concerns also persist as long as the drug remains illegal in the eyes of the federal government. Continue reading

August 19, 2018

4 Billion Reasons to Believe Marijuana is the Next Big Industry

By Cannabis Law Group

Constellation Brands has made the biggest investment the marijuana industry has ever seen with a mighty $4 billion medical marijuana going to Canopy Growth. Canopy Growth, a Canadian company, was already considered one of the giants of the cannabis industry, and this investment will only further their global footprint, according to a report from Esquire. Meanwhile, Constellation is diversifying its portfolio, which currently consists of major alcohol brands, such as Modelo and Corona.

The relationship between Constellation and Canopy Growth is not a new one. Last year, Constellation made an investment in the company of $191 million to develop a drink infused with cannabis. Now, with Canada passing full legalization of marijuana, Constellation executives are getting on board one of most anticipated industries in the world in a more substantial way; they now hold a 38 percent stake in Canopy Growth. The most recent investment won’t just go to beverage research, but also into edibles, new medical marijuana advancements, and worldwide growth. Continue reading

August 17, 2018

What Marijuana Businesses Need to Know About Recalls

By Cannabis Law Group

Two recent cannabis product recalls have some marijuana businesses concerned about such scenarios becoming a widespread issue, particularly with more stringent testing regulations recently becoming mandatory. According to a report from Marijuana Business Daily, though, several testing labs have said there is little to be concerned about, especially as these regulations continue to balance out and become more integrated.

The testing labs noted first of all that the two instances of recalls, both in late July, were self-imposed by the companies who manufacture the product. Thousands of marijuana products have passed lab tests and have moved along to retailer shelves. The data from these tests is double checked by the Bureau of Cannabis Control to help ensure product that should have failed the tests does not make it into stores. For the most part, companies have been able to keep up with the new regulations, and the recalls were reportedly a precautionary move by those particular businesses. As understanding of all regulations continues to grow stronger, incidents of product testing failures will continue to decline. Continue reading

August 11, 2018

Marijuana Businesses Feeling Heat from California Wildfires

By Cannabis Law Group

Wildfires raging in California are devastating lives and promise to have major effects on marijuana businesses throughout the state. Many are saying the rampant fires are some of the worst in the state’s history, and are particularly devastating considering it was just last year that 1.3 million acres were annihilated by fires. An article from Rolling Stone is reporting so far there are 16 major fires tearing mostly through Northern California, with more than 14,000 firefighters battling the blazes. Northern California, of course, is a region replete with cannabis farms, making these fires particularly devastating to the state’s recreational marijuana industry, still in its first year.

Two of the blazes, which combined are dubbed the Mendocino Complex Fire, are at the heart of cannabis country. The Mendocino Complex Fire has already been declared the largest in California’s history. The previous record was set just last year, and at that time it was estimated 30 to 40 percent of the cannabis growers in the state were affected by the wildfires. It is unknown how a second round of fires will impact the industry, but it certainly is not positive. Within the last few weeks, More than 283,000 acres have been destroyed, including at least five greenhouses and countless outdoor crops. To the northwest the Carr Fire has taken out more than 173,000 acres, including several buildings belonging to one of the leading growers in the state. Continue reading

June 19, 2018

Long Beach Finally Passes Recreational Marijuana Business Policies

By Cannabis Law Group

Long Beach will soon be the next city in Los Angeles County to embrace recreational marijuana business plan marijuana after its city council voted overwhelmingly to regulate industry operations. The council passed a series of amendments that will set guidelines for cultivators, testing labs, distributors, and dispensaries in the city, according to an article from Press-Telegram. The 7-1 vote reflected a strong support from council, with the support of the mayor as well as the residents who voted for Proposition 64 in November 2016.

City staffers estimate the move could bring in about $750,000 in taxes from recreational sales next year and a whopping $4.5 million from medical marijuana taxes. City officials also hope to stimulate the economy with a clause that requires collective-bargaining agreements with United Food and Commercial Workers 324, the union that represents cannabis workers, raising the bar on the quality of jobs provided by local establishments. Continue reading

June 6, 2018

Politicians Find Going Pro for Marijuana a Winning Strategy

By Cannabis Law Group

It’s becoming more clear that support of marijuana is politically marijuana business advantageous. Politicians across the country at all levels are stepping forward with pro-marijuana campaign platforms, and it’s paying off. Even here in California, where both medical and recreational marijuana are legal, it is clear voters want candidates who will continue to protect those laws, according to a report from Civilized. Sen. Dianne Feinstein (D-Calif.) recently switched her stance to pro-marijuana and won her primary bid for re-election. It’s no surprise her change of heart came after her Democratic challenger Kevin de Leon came out swinging with strong support for cannabis last year. Because of California’s “top-two” primary system, both candidates will be on the ballot in November, even though they are from the same party.

These sudden “evolutions” in thinking about marijuana are springing up among political figures all over the country. Senate Minority Leader Chuck Schumer recently had a similar change in thinking, and former Republican Speaker of the House John Boehner flipped on his previously staunch anti-marijuana views to join the board of directors of a cannabis company. Continue reading