Category: aBIZinaBOX Inc. and Jordan S. Zoot

We happened upon an article about a New York conference that both piqued our curiosity and reminded us of another conference which was held in Upstate New York a bit over sixty years ago. MjMicro is an invitational forum that unites publicly traded cannabis companies led by seasoned executives with next level, high net worth investors looking for shorter term ROIs and guaranteed liquidity.

What does the acronym “CCC” mean? CCC is our acronym for “California Chaos Causes” We cannot list all of the causes of problems in California’s cannabis industry. The list of causes becomes longer every day. Our CCC refers solely to major causes.

By now, anyone that reads our articles is certainly aware that we like the cannabis cooperative association [“CCA”] structure, its an amazing vehicle for small craft cannabis cultivators to pool their resources, save money and remain competitive in a market that is quickly filling up with large vertically integrated businesses. We have become incredibly frustrated with the reticence of CalCannabis to issue a license to a CCA other than one that is fo4Redacted RParrottLetter (2) engaged in cultivation or processing. One of the professionals we know that is active in seeking to get CCA’s licensed wrote a letter to Mr. George Parrott, the Director of CalCannabis. We are sharing a redacted version of that letter with everyone so that everyone becomes aware of where this situation stands. We intend to distribute this broadly in the hope that we can resolve this without litigation.

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 pervasive in the the market today.

Everyone knows the maxim “Free advice is worth what you pay for it”  There are, however, exceptions.  Everyone knows a second maxim “The exception that proves the rule”  In this article, we provide free advice to the California Department of Tax and Fee Administration (“CDTFA”).  We are providing free advice which we believe is valuable.  Hence, our free advice in this article is an exception that proves on some occasions free advice should be followed. We can summarize this article with a simpler statement.  “Wake up CDTFA…You are leaving money on the table!”

In this article we will address solely the responsibility of the California Department of Tax and Fee Administration (“CDTFA”) for the shortfall in the projected tax revenue from cannabis. 

Licensing Cannabis Cooperative Associations [“CCA’s”] – we have been working on getting CCA’s recognized and licensed by the California cannabis regulators for half a year. We share our success in getting the California Dept. of Tax and Fee Administration [“CDTFA”] to recognize CCA’s and successfully received Sales and Cannabis Permits for a number of CCA’s. The process with CalCannabis has been quite a bit more protracted. However, we are confident that we will be successful, we will share more when we know more.

CA Lobby Activity Background – we enjoy turning over rocks…we find poisonous snakes, scorpions, all kinds of vermin and lobbyists. Our current fascination is with lobbyists, lobbying firms, trade associations, and consultants that are contracted by businesses to seeking to exert influence over elections, activity by California Legislature, activities bystate-level agencies in California the regulate and tax the legal cannabis industry [BCC, CDPH-MCSB, CFDA-CalCannabis, and CDTFA.]. [We will address the municipal and city level in a separate article.]

Cantonization – California – Cannabis – We have been looking forward to writing this article for a number of reasons.  We want to begin by thanking John Schroyer of MJBizDaily for introducing us to the issues we will discuss in this article.  We will try to polish some of the raw gems that John identified in a three-part set of articles

Illinois Cannabis Legislation, titled Illinois Cannabis Regulation and Tax Act introduced, and in classic Illinois fashion Governor Pritzker is already crowing about the bill making Illinois a leader, even though nine states have already legalized adult use.

We were prompted to write this article by Joe Kukura’s article “Pot Growers Nipped in the Bud by Bureaucratic Bungle.” We agree with the article. CalCannabis created a gigantic debacle with its licensing of cultivators. However, a more accurate statement is, “CalCannabis is a gigantic blunder.”

Eek Another Regulator – the nightmare of nightmares I happened upon yet another cannabis regulator in California…I have to admit that this one has me dumbstruck…never knew it was there…and am still trying to figure out where it came from. [I am just waiting for everyone to tell me that they knew about it and I am the only stupid one that didn’t know about it…how could the cannabis industry in California possibly live without another regulator?

At the time legalization of cannabis loomed as a potential reality on the horizon, Humboldt County was positioned to maintain as a legal industry the prosperity that cannabis had provided the County for the preceding 30 years. Humboldt County had a well-established cannabis industry with a world-wide reputation for the quality of its product and growers. Of course, cannabis is a controlled substance under federal law and the vast majority of the residents of Humboldt County could have been criminally indicted.

A number of articles and comments have addressed the application of IRC Sec. 280E and inventory costing methods for “Cost of Goods Sold” for a legal cannabis retailer in light of the two Harborside decisions. We have read no analysis that appeared to completely “get it right.”   Judge Holmes failure to impose accuracy-related penalties under IRC Sec. 6662 seems to have confused many commentators.  Let us see if we can produce a clearer articulation of inventory costing for the cannabis industry.

“It is the bureaucracy Lori Ajax heads that is responsible. Lori Ajax is responsible solely to the extent she failed to provide appropriate leadership and guidance when she had an opportunity to do so.”

Federal Legalization – Then What? – It is fascinating to step back and observe how the mindset of many in the cannabis industry seems to work. Let’s think through a couple of scenarios and have a peek at the landscape in a post-legalization world. Let’s begin with the following:

This article is the companion to our article relating to the impact of taxes on the sale of cannabis flower. Our earlier article provided a simple illustration of the impact of taxes on the movement of flower through California’s commercial cannabis market. This article provides a simple illustration of the impact of taxes on the movement of cannabis oil through this market. 

The key to the long-term success of every medical or adult-use cannabis business in California will be found in the management of tax liabilities.

The reason we have chosen to frame the discussion by reference to the rules that govern Circular 230 Practitioners is that we seem to be getting a disproportionate number of questions about “is it ok to…” and finish the sentence with myriad forms of conduct that could land a business owner in prison and be a death penalty for a professional license.