California Targets Cannabis Businesses over Unpaid Taxes

Duane Morris partner Tracy Gallegos was quoted in this article in MJBizDaily.

California’s business tax collector is ramping up enforcement against unlicensed and licensed cannabis companies, which owe the state nearly $200 million in unpaid taxes. […]

Tracy Gallegos, a corporate partner in the Las Vegas office of the Duane Morris law firm, said many of her clients entered the regulated industry with high aspirations, but naiveté and poor, early business decisions compounded problems.

“So they’ve all fallen behind on their taxes, because they weren’t prepared,” said Gallegos, who co-leads the firm’s cannabis group.

“They weren’t expecting these particular costs of licensing, compliance and taxation.”

She’s concerned that ramped-up enforcement efforts, such as the recent raid of a well-known, licensed Los Angeles marijuana retailer, will have an adverse effect on compliance and collections. […]

“If the CDTFA is overly aggressive in terms of resolving individual tax delinquencies, I think that might have the effect of people turning back to the illicit market,” Gallegos said.

To read the full text of this article, please visit the MJBizDaily website.

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