Why it matters: Santa Barbara County officials are implementing harsher penalties on cannabis businesses that fail to pay their taxes on time. This move aims to address the growing problem of back taxes accumulating in the county.
What they are saying: Deputy County Executive Officer Brittany Odermann stated that starting in August, cannabis businesses that do not pay their quarterly taxes or submit the necessary paperwork within the 30-day grace period could lose their operating license. Supervisors unanimously voted in favor of increasing penalties on cannabis license holders to encourage timely payments and report filings.
The big picture: The county is taking action to address the issue of cannabis businesses not paying their taxes on time. The problem is exacerbated by the fact that less than a quarter of U.S. cannabis businesses are turning a profit.
What to watch: It remains to be seen if the stricter penalties will effectively incentivize cannabis businesses to pay their taxes on time. Additionally, there may be ongoing discussions about alternative options for payment or potential revisions to the penalties.
My take: It is understandable that Santa Barbara County is taking measures to ensure cannabis businesses fulfill their tax obligations. However, the severity of the penalties and the comparison to other forms of tax non-compliance raised by some supervisors raise concerns about the potential impacts on businesses. Finding a balance between encouraging tax compliance and avoiding undue harm to the industry will be crucial.
