(a) Pursuant to Business and Professions Code section 494, the Bureau may petition for an interim order to suspend any license or impose licensing restrictions upon any licensee, if: (1) The licensee has engaged in acts or omissions constituting a violation of the Business and Professions Code or this division, or been convicted of a crime substantially related to the licensed activity, and (2) Permitting the licensee to continue to engage in the licensed activity would endanger the public health, safety, or welfare. (b) An interim order for suspension or restrictions may issue with notice, as follows: (1) The Bureau shall provide the licensee with at least 15 days’ notice of the hearing on the petition for an interim order. (2) The notice shall include documents submitted in support of the petition. (c) An interim order for suspension or restrictions may issue without notice to the licensee, as follows: (1) If it appears from the Bureau’s petition and supporting documents that serious injury would result to the public before the matter could be heard on notice. (2) The Bureau shall provide the licensee with a hearing on the petition within 20 days after issuance of the initial interim order. (3) Notice of the hearing shall be provided within two days after issuance of the initial interim order. (d) The Bureau shall file an accusation, pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, within 15 calendar days of the issuance of the interim order. Authority: Section 26013, Business and Professions Code; Reference: Sections 494, 26011.5, 26012 and 26031, Business and Professions Code.
Cannabis operators are pushing lawmakers to scale back these taxes and prevent business owners from being tempted to remain in the black market because of the high costs of legalization. In response to advocacy efforts from the cannabis industry, California lawmakers proposed a bill this month that would drastically reduce excise and cultivation taxes on legal cannabis for a period of three years. As one of the bill’s authors, Rob Bonta, is quoted in the LA Times, lowering taxes on legal cannabis operators would be a way of “keeping customers at licensed stores and helping ensure the regulated market survives and thrives.”
In particular, the bill, AB 3157, would temporarily remove the state tax on cannabis cultivation, which is currently set at $9.25/oz for flowers and $2.75/oz for leaves. Additionally, it would lower the excise tax on cannabis purchases from 15 to 11 percent. Both of these changes would be welcome steps for the legal cannabis industry: the excise tax is one of the more confusing and onerous burdens on legal cannabis operators, so having it lessened would be particularly well-received. However, even after these changes, California’s effective tax rate would still be comparable to Colorado’s during its early legalization struggles. Therefore, it may not be enough to ward off the black market entirely.
Colorado took a similar approach when they rolled back cannabis taxes after operators were being pushed into the black market. As the Washington Post reported, in the immediate aftermath of legalization Colorado’s up-to-33% effective tax rate created a large market for illicit goods: “Camouflaged amid the legal medicinal and recreational marijuana market, the ever-adaptable underground market thrives. Some in law enforcement and on the street say it may be as strong as it’s ever been, so great is the unmet local and visitor demand.” California lawmakers are aware of the risks of overtaxation and the resulting effects.
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