By JOSE HERRERA | City News Service
The Los Angeles City Council on Tuesday instructed staff to develop a so-called “amnesty program” for licensed cannabis businesses, citing a need to support more than 500 delinquent operators who collectively owe some $400 million in taxes and recoup a portion of those dollars.
In a 13-0 vote, the council approved a proposal introduced by the Office of Finance, which seeks to capture unpaid cannabis taxes that otherwise would be lost.
Council members Traci Park and Hugo Soto-Martinez were absent during the vote.
“There’s still work to do with the tax amnesty program,” said Councilwoman Imelda Padilla, who chairs the council’s Government Operations Committee, which is leading discussions on the matter.
“The city finds itself with a unique opportunity to bring businesses into compliance,” Padilla added, noting that any dollars collected from the proposed program would further support existing operators and ensure they stay in the city.
The council and Mayor Karen Bass will be required to approve an ordinance later this year to effectuate the proposed program.
In fall 2020, the Office of Finance offered a similar program, which generated approximately $20.6 million for the city from 6,190 cannabis businesses that participated. At the time, the city offered businesses a 12-month installment plan to resolve their outstanding taxes.
The new initiative would provide a full waiver of penalties and interest, and offer installment agreements for up to 36 months for cannabis operators who sign up. Dollars captured through the program would be allocated into the following categories:
— About 20% would support the General Fund and the Office of Finance
— Another 40% would go toward the Los Angeles Police Department and the City Attorney’s Office for illegal cannabis enforcement
— The remaining 40% would support the Community Investment Department for the city’s Social Equity Cannabis Businesses grants
Los Angeles had 738 licensed, registered cannabis business accounts as of Oct. 2, 2025, according to city finance officials. A business tax on cannabis products and services requires taxpayers to file and remit their taxes at the end of each month based on the gross receipts generated in the month prior.
The tax rate for cannabis in Los Angeles is more than 40%, which includes a 10% local tax.
Finance officials say that over time, many cannabis businesses haven’t been able to keep up with the payments.
Of the $400 million in outstanding taxes, about $35 million is incurred interest and $100 million in penalties, and of the more than 500 delinquent businesses about 329 owe less than $200,000, while another 48 owe more than $2 million each.
Financial officials noted there’s a significant portion of unpaid taxes that are more than three years old and cannot be collected due to the statute of limitations. Some taxes are tied to businesses that are no longer in operation but never canceled their accounts.
City officials anticipate waiving approximately $20 million in accumulated penalties and collecting about $30 million from the program over 12 months.
Historically, the Office of Finance has not offered industry-specific tax relief, but recognized it was necessary for the cannabis industry, noting extreme challenges such as the proliferation of unlawful cannabis businesses in the city and a tax burden that exceeded rates compared to other industries.
Daniel Sosa owns four licensed cannabis businesses in Los Angeles and previously urged the city to take immediate action to support the industry. He also criticized the City Council for failing to crack down on illegal cannabis shops.
“So, not only are we competing against the illicit market, but we’re competing against licensed dispensaries that the city is allowing to stay open, who have made it their business model to not pay taxes,” Sosa said during Tuesday’s council meeting.
He emphasized the proposed amnesty program would give the city a “clear pathway” to shut down delinquent and illegal dispensaries.
“This program is just a small band-aid to a gaping wound. We need systemic change for our industry. We need lower taxes,” Sosa said.
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