L.A. cannabis businesses owe $400 million. The city may get only $30 million - Los Angeles Times

Los Angeles Times

by Sandra McDonald

March 4, 2026

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Los Angeles cannabis businesses collectively owe $400 million in back taxes, including penalties and interest. To address this, the City Council has proposed an amnesty program that would allow businesses to pay their overdue taxes over three years without facing late fees or interest. This move comes as the city grapples with a $1-billion budget gap and seeks additional revenue for basic services. Based on projections, the program could generate around $30 million in back taxes while waiving approximately $25 million in penalties. The proposal was unanimously approved by the council, which tasked the Office of Finance with drafting the necessary language to implement the program. Over 500 licensed cannabis businesses out of roughly 700 are eligible, but only about $150 million of the total debt is currently collectible. The remaining amount includes non-payable taxes and debts tied to inactive businesses. City leaders hope the amnesty program will help bring businesses into compliance while providing funding for critical services. Under the proposed plan, 20% of the collected revenue would go to the city’s general fund and the Office of Finance. Another 40% would support illegal cannabis enforcement efforts through the Los Angeles Police Department and the city attorney’s office. The remaining 40% would be allocated to social equity grants, particularly benefiting low-income and minority communities disproportionately impacted by cannabis law enforcement. City Councilmember Imelda Padilla emphasized that this initiative presents a unique opportunity to address tax compliance while supporting targeted programming for the cannabis industry. Critics, including some cannabis business owners, argue that the 10% city tax rate on gross sales is excessively high compared to other industries. Daniel Sosa, who owns four cannabis dispensaries, urged the council to make participation in the amnesty program mandatory for delinquent businesses and warned of stripping licenses for those who fail to comply. He also called for a more equitable tax structure, similar to other businesses operating in the city. The proposed ballot measure aims to close a tax loophole for illegal cannabis operations while increasing civil collection efforts. If approved by voters, it would further strengthen the city’s ability to regulate and collect taxes from all cannabis businesses, both legal and illegal. This initiative highlights the ongoing challenges of balancing tax enforcement with fostering a competitive and compliant market in Los Angeles’ thriving cannabis industry. The situation underscores broader debates about taxation, equity, and public safety in the cannabis sector. As the city seeks to maximize revenue while addressing disparities and

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Originally published on Los Angeles Times on 3/4/2026