The cannabis sector has struggled with mounting debt for years, and recent changes in tax laws have intensified the industry’s financial woes to a breaking point with business closures looming. A San Francisco lawmaker introduced legislation targeting pot businesses that default on their debt payments, signaling the severity of the situation. Debt problems have plagued the cannabis industry for some time, with a 2022 report revealing an astounding collective debt surpassing $600 million.
A significant tipping point was reached this year with a shift in tax law, transferring the responsibility of cannabis excise tax payments from distributors to retailers. This shift became evident with the first tax payments due on May 1, exposing a significant hurdle for many cannabis retailers.
State tax data indicates that retailers are struggling to pay their state excise taxes, especially by the May 1 deadline. Shockingly, more than 13% of California’s retailers, equivalent to 265 pot shops, failed to make any tax payment by this deadline, putting them at risk of a 50% penalty on their unpaid taxes. The figure might rise further, as the state….