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Keeping Cannabis Simple – We have had an on-going debate with a friend over a long period of time. We have a running debate over whether knowledge is a blessing or a curse. Every time he invokes “I wish I was stupid and didn’t have to think about everything…I remind him “be careful what you wish for, sometimes you get it. If anyone were to ask me for an example of where the adage is absolutely true, the legal cannabis industry in California is probably the best example.
Before everyone recoils with the thought that this article is more of the same, permit us to promise it won’t be that. We have written extensively about what believe the regulatory and tax authorities could have done to have avoided the chaos that pervades the market today.
There are a small number of critical points that would have made a tremendous difference.
- The bulk of the licensing process should have been centered at the city, municipality and county levels for more than land-use and health-related issues. [We have learned that we need to add that any individual or firm that is performing services for a unit of government should be absolutely prohibited from representing applicants or licensees].
- Once the local approvals were obtained, the issuance of a state license should have been nothing more than a formality.
- The state regulators should have been focused on promulgating procedures and rules which were understandable, easy and simple to comply with.
- The cannabis industry tax filing, reporting, and payment should have been the same. CDTFA’s focus should have been on “following the money”, not a Byzantine version of Track & Trace.
If these four principles had been followed, a substantial portion of the problems that the industry has experienced never would have happened or been so prolonged. There is perhaps nothing that illustrates this better than the Gordian knot that CalCannabis seems to be in with cannabis cooperative associations [“CCA’s]. [See “Licensing CCA’s”]
The insanity of business plans and decks that focus on cornering the supply chain, inventing the next best whatever, while paying scant attention to who would be targeted as customers and how they would be attracted is “ass-backward”.
The California Legislature’s attempt to spawn a large number of “instant licenses” under AB 1356 is complete nonsense. Nothing is going to be accomplished with more licenses unless and until the four items described above are corrected.
The reduction of tax rates will accomplish VERY LITTLE until the record keeping, filing, reporting and payment process is substantially simplified and streamlined.
When people get excited about legalization at the Federal level we point them to Federal Legalization – Then What?
We have revised our definition of why a cannabis industry business [or any business for that matter needs a CPA]. The answer is either
“To help ensure that the business doesn’t destroy itself by failing to meet compliance obligations [especially employment and sales and other indirect taxes] before they start making millions” or
“By providing the owners of a business with a constant harsh reality check and a way to prevent them from getting screwed by everyone that purports to want to help them.“