- Los Angeles cannabis businesses owe about $400 million in back taxes and fees, but only $30 million may end up in city coffers.
- Under an “amnesty” proposed by the City Council, cannabis businesses that pay their back taxes within three years would be forgiven late fees and interest.
Los Angeles cannabis businesses that owe back taxes wouldn’t have to pay late fees and interest under an “amnesty” program proposed by the City Council.
To qualify, the businesses would have to pay their city taxes within three years.
The council’s unanimous vote on Tuesday, asking the Office of Finance to draft language creating the program, comes at a time when city leaders are searching for money to cover basic services after closing a $1-billion budget gap.
More than 500 of the roughly 700 licensed cannabis businesses in the city collectively owed about $400 million in taxes — an amount that includes $100 million in penalties and $35 million in interest, according to an October report from the Office of Finance.
The total amount owed increased to $417 million as of December, according to Matthew Crawford, the office’s assistant director.
But only about $150 million is collectible, since some tax debts are outside of the three-year statute of limitations and some cannabis businesses are no longer operating.
Based on a projection that about half of eligible cannabis businesses would take part in the program, the city would collect about $30 million in back taxes while waiving about $25 million in penalties, the October report said.
Under the amnesty program, about 20% of the revenue would go to the city’s general fund and the Office of Finance. The Los Angeles Police Department and the city attorney’s office would receive about 40% for illegal cannabis enforcement, and the remaining 40% would fund social equity grants to cannabis operators, particularly members of low-income and minority communities that have been subject to disparate enforcement of criminal cannabis laws.
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