In the world of legal cannabis, taxes have become a significant burden for companies, especially when competing with the black market. Many businesses struggle to meet the high tax requirements imposed by governments, putting their financial viability at risk. Santa Barbara County in California has recently taken an extreme approach to revenue collection by implementing a ‘death penalty’ tax structure. Under this system, companies must pay their taxes promptly or face license revocation.
*This article contains the opinion of the writer on issues related to cannabis taxation, specifically focusing on Santa Barbara County and its recent implementation of a death penalty tax provision.
The Latest Death Penalty Tax Laws in Santa Barbara
According to a report by High Times, the new cannabis death penalty law in Santa Barbara County was introduced on June 27th, 2023, by the Santa Barbara County Board of Supervisors. The new measure imposes harsher penalties on companies that fail to pay their taxes on time. Starting from August, the county can take action against businesses that have not paid their taxes and have not filed the required paperwork within the 30-day grace period. Non-compliant operators risk losing their licenses.
The unanimously approved provision aims to strengthen and streamline the tax collection system by introducing stricter penalties to deter non-compliance. During the meeting, Deputy County Executive Officer Brittany Odermann stated, “This is a severe measure. If you’re late… You cannot renew.” This concept of a ‘death penalty’ is meant to illustrate the severe consequences faced by companies that fail to meet their tax obligations.
During a previous meeting on June 6th, it was reported that 12 licensed operators had not paid their taxes by the April 30th deadline. Although three of them eventually filed their taxes between April 30th and June 6th, these late payments highlighted the growing number of non-compliant operators. Quarterly tax payments are due four times a year: at the end of January, April, July, and October.
The system includes an automatic 30-day grace period. For instance, if a business is required to pay by June 30th, they will automatically have until July 29th to make the payment. After this date, the payment is considered delinquent, but still legally enforceable. The concept of the ‘death penalty’ comes into effect after the 30-day grace period expires.
Is the Death Penalty Tax Supported by Everyone in Santa Barbara?
A recent report by cannabis consulting company Whitney Economics reveals that the tax situation is challenging for all cannabis operators, primarily due to federal taxes that disallow deductions for basic expenses. According to the report, only 24% of businesses reported making a profit last year, raising concerns about their ability to fulfill substantial tax obligations while struggling to stay afloat.
However, not everyone in Santa Barbara County agrees with the introduction of the death penalty tax provision. Steve Lavagnino, the 5th District Supervisor, opposes the measure and stated, “This is not the way that we collect taxes in the county. I think we’ve gone from a kind of slap on the wrist to a death penalty. That would be like if you’re one day late on your TOT [transient occupancy tax], you have to shut your hotel down, or if you’re one day late on your property taxes, you gotta move out of your house.”
Dr. Jen Chalmers is an accomplished writer and cannabis enthusiast. With a Ph.D. in Botany and years of experience as a researcher, she brings a scientific perspective to her captivating articles on cannabis news, recipes, and the fascinating world of psychedelics.