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from the shocked-that-stoners-forget-to-pay-their-bills dept.
Industry insiders are warning that hundreds of pot shops could go out of business this year:
California's pot industry could be on the verge of an "extinction event," with pot shops going out of business as they miss tax payments and sink under millions of dollars of debt.
Debt problems have plagued the industry for years — a 2022 report estimated that the industry was collectively sitting on over $600 million in debt — but a change in tax law that took effect this year has stakeholders worried the mounting debt bubble will finally become fatal. A San Francisco politician introduced a law this year in the state legislature that would crack down on pot businesses that don't pay their debts.
State law recently shifted the burden for paying cannabis excise taxes from distributors to retailers, with the first tax payments due May 1. Retailers have historically had the most trouble paying their bills, and it appears that many shops lack the cash to pay their state excise taxes, according to new state tax data obtained by SFGATE.
Over 13% of California's retailers, or 265 pot shops, failed to make any tax payment by the May 1 deadline, according to the California Department of Tax and Fee Administration. Those businesses are now facing a 50% penalty on the taxes they owe, which could be a death blow to many shops.
[...] The entire cannabis supply chain has faced a chronic debt problem: Farmers report never getting paid for thousands of dollars in product, distributors say retailers don't pay them and have started blacklisting some shops, and even the federal government is getting stiffed. An analysis done last fall by Green Market Report found that 10 of the largest pot companies in the country owed over $500 million combined in unpaid taxes.
Related: How State Cannabis Legalization Became a Boon for Corruption
(Score: 4, Insightful) by MIRV888 on Monday May 22, @06:26AM (5 children)
Economics 101.
If your weed guy who's been reliable and delivers is cheaper than the dispensary, that's not much of a choice.
The legal states also have a huge off the books mailing (fedex/ ups actually) business. Illegal states love mail order dro.
Road trips to Colorado are a regular thing. The taxes / regulation are a clusterf*ck for sure, but the black market is still cheaper and easier.
(Score: 2, Informative) by Anonymous Coward on Monday May 22, @09:27AM (4 children)
This happens because the government takes enough action against the untaxed stuff.
So if they want taxes on weed they need to do enough about the untaxed weed too.
(Score: 2) by looorg on Monday May 22, @11:02AM (1 child)
Have the police/DEA in states with legal pot done more or less to counter the non-legal weed sources? Naturally they have to deal with the illegal competition if they want to tax the legal side. Otherwise that business will be very lopsided in favor of the dark side.
That said it seems like there will be a lot of anxious weed dealers, that can't pay their taxes. Good thing for them they have a product that apparently is supposed to cure that. To bad it would break the drugdealing rule #1 -- don't get high on your own supply.
(Score: 1) by Runaway1956 on Monday May 22, @02:58PM
Please keep the DEA out of this. They rank among the most corrupt government agencies. Keep it among the local police departments, some of which are corrupt, some of which are pretty honest, and just trying to do their jobs.
Abortion is the number one killed of children in the United States.
(Score: 2) by DannyB on Monday May 22, @04:11PM (1 child)
You just made me realize that what we need is . . .
A War On Drugs!
That will fix it!
As long as it is properly funded like SLS.
While Republicans can get over Trump's sexual assaults, affairs, and vulgarity; they cannot get over Obama being black.
(Score: 0) by Anonymous Coward on Tuesday May 23, @10:12AM
Will the current War on Drugs then be known as World War on Drugs I or the Great War on Drugs and the new one will be the World War on Drugs II?