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LA cannabis businesses with unpaid taxes can stay open another year
Cannabis plants at the Pure Beauty growing site in Sacramento on Jan. 26, 2022.
(
Miguel Gutierrez Jr.
/
CalMatters
)
More than 100 cannabis businesses in L.A. that were expected to lose their licenses at the end of the year may be able to stay open after a City Council vote Tuesday.
A city ordinance that took effect in August would only have allowed cannabis businesses to renew their licenses if they owed less than $1 million in unpaid city taxes and had been delinquent on their taxes for less than four years.
The limits were set to get more strict each year until 2030, when businesses would need to owe less than $100,000 in unpaid taxes.
The City Council voted to delay the restrictions for one year because a separate program intended to provide an exception to businesses who agreed to follow a tax payment plan could not begin on time.
There are more than 1,000 licensed cannabis businesses in the city of L.A., according to the Department of Cannabis Regulation, and 125 of those would not have been eligible to renew their licenses had Tuesday’s vote not passed.
In October 2025, City Treasurer Diana Mangioglu reported that 500 cannabis businesses owed a total of $500 million in unpaid taxes, interest and penalties. Of those businesses, 48 owed more than $2 million.
Owners of many cannabis retailers, manufacturers and distributors have asked local government leaders for help as they face higher taxes than most industries and strong competition from unlicensed businesses — which pay no taxes and typically sell at a lower price in the illicit market.
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Evelyn Scott gave public comment during the City Council meeting and said these challenges led her business to close.
“Losing our license will make it even harder to reopen, generate revenue, create jobs and meet our obligations to the city,” Scott said.
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What is the tax amnesty program?
When the city enacted licensing restrictions based on cannabis businesses’ unpaid taxes, local officials also intended to make a pathway for delinquent businesses to come back into compliance.
The cannabis tax amnesty program allowed for some businesses that would otherwise be prevented from renewing their licenses to agree to a payment plan that could last up to five years. If the businesses kept to the agreement, they could continue to renew their licenses, would have penalties and interest on unpaid taxes forgiven and wouldn’t face criminal charges for not paying those taxes on time.
Could the agreements help the city?
L.A.’s Office of Finance, which is in charge of the program, estimates it could bring in $10 million in city tax revenue in the first year.
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But it wasn’t possible to start the program for 2027 licenses, according to Matthew Crawford, assistant director of the finance office.
He told LAist in an email that the office wouldn’t be able to begin the program in time without exposing the city to “unacceptable levels of risk to both [a tax administration] system replacement project and the integrity of the amnesty program.”
Crawford said the finance office still expects the city to receive the same amount of revenue once the program begins.
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