Tax relief is hard to come by in the cannabis industry, to say nothing of broader financial assistance at all. In California, however, State Treasure Fiona Ma tells CBT that a sales tax extension and a $50,000 bridge loan are available to small business owners working in the cannabis industry.
Gov. Gavin Newsom signed the 90-day extension into law last month, giving small business owners until late July to file and pay their first-quarter sales taxes. At the state level, cannabis sales tax comes in at 7.25%.
On top of that, Ma says that small businesses may keep up to $50,000 of their sales tax payments for a year, effectively using the cash as a no-interest bridge loan between now and next summer. The $50,000 would need to be paid back in installments by June 30, 2021. This bridge loan is available to businesses will less than $5 million in annual revenue.
Ma is clear: This isn’t part of the typical tax refund process. It’s a separate plan that business owners must opt into with the state’s taxing authority.
For more information on how to sign up for this bridge loan program, visit the California Department of Tax and Fee Administration’s website.
“This is pretty much the only relief besides the 90-day extension and payment requirement for our federal and California income tax returns,” Ma says. “But for California, unlike the federal government with 280E, California cannabis businesses can deduct their ordinary business expenses—not just cost of goods sold.”
Ma says she’s unsure whether the second-quarter tax deadline will be moved at all, but it seems unlikely. Newsom’s executive order was an emergency measure provided in the early days of the coronavirus outbreak and its attendant economic pressures. But the ripple effects are compounding, and delaying sales tax payments any further could have significant effects on other areas of the state.
“Right now, the federal government is not really helping these smaller cities with the municipal liquidity financing program,” Ma says. “If we push back another 90 days, that’s going to severely continue to impact local governments.”