Special guest, California State Treasurer, Fiona Ma joined us to share more about her work in politics to help the cannabis industry and take some questions from the audience.
If you need help with cannabis banking, accounting, or licensing for your cannabis business, then please reach out to our team to schedule a call.

News/Trends Update
Our monthly video update was cut short yesterday, some technical difficulties. It’s all good, things happen!
Below are the news articles that were discussed by category
Cannabis Licensing and Regulations
Cities With Open Cannabis Licensing Submissions
- California: City of Coalinga, City of Concord, City of Marysville, Nevada City, Palm Springs, County of San Luis Obispo, Santa Ana, Alameda County, Chico, Corona, Fresno and many more!
- Other cities and states are licensing around the country.
Need help with preparing your licensing application? Reach out to our team today to learn more about our application support services.
- Cities around the country are getting initiatives on the Nov 3rd ballot
- These are around a few topics:
- Authorizing new cannabis businesses or expanding their local industry
- Voter approval for taxes. Usually, the first step…need to have citizens vote on taxes.
- Advisory questions that don’t bind city councils…just getting a pulse of their constituents.
- One example of this is Oceanside
- Oceanside voters will decide Nov. 3 whether to establish a city tax of up to 6 percent of gross revenues for cannabis businesses.
- Another example is Pennsylvania Governor Calls For State To Legalize Marijuana, Citing Pandemic
- These are around a few topics:
- Acreage won a motion to block Portland, Maine from favoring residents
- Acreage (or their subsidiary Wellness Connection) would have a license anyway, even if the rules were to stay.
- This seems like they are pursuing this to create a precedent for other contentious states.
- Weakening this residency requirement could make it easier for sophisticated MSO’s to come in and grab market share quickly from smaller, local businesses.
- The market should open on October 9th.
Cannabis Tax Updates
- California Cannabis Tax Revenues Soar as Industry Gets Going, But Illegal Market Still Dominates
- Nevada cannabis board is cracking down
- Medical Cannabis business in Vista sees a 44x increase in license fee
- Cities may start to question the integrity of the self-reporting of taxes. Cash-heavy cannabis industry increases the chances of diversion/theft of revenue.
- Mandatory audits could be more commonplace in next 12-18 months.
- Keep excellent records for financial reconstruction in case audits come to a city near you.
Cannabis Legal Updates
- Illicit Pot Still Dominates After Two Legal Years
- California Cannabis Delivery Still Uncertain
- Let’s see how this plays out. It could have huge, long-reaching implications and create/sustain more cannabis ‘deserts’.
- Let’s see how this plays out. It could have huge, long-reaching implications and create/sustain more cannabis ‘deserts’.
- DEA Reveals Details Of Investigation Into California Marijuana Companies With Latest Court Filing
- California Cannabis Company Settles Enforcement Case for Over Half a Million Dollars
- City of West Hollywood makes deal with cannabis businesses
Cannabis Finance and M&A Updates
- Marijuana technology company Dutchie nets $35 million in capital raise
- Don’t sleep on cannabis tech. There are some pretty green pastures out there!
- Don’t sleep on cannabis tech. There are some pretty green pastures out there!
- Q2 Cannabis Earnings Were Strong. But What Does This Really Mean?
- Don’t solely focus on high revenues. Take time to understand how companies are managing SG&A expenses and 280E strategy.
- Don’t solely focus on high revenues. Take time to understand how companies are managing SG&A expenses and 280E strategy.
- Nevada’s Pharmagreen Biotech Files For Bankruptcy
- Appears to be a US-based subsidiary of a Canadian company that is cannabis plant-touching that filed for Chapter 11 bankruptcy protection.
- Could open the door to other plant-touching companies to file for bankruptcy.
- Pharmagreen depends on the cannabis industry and with the Way to Grow Case as precedent, it may be hard for Pharmagreen to get through this bankruptcy process.
- California cannabis sales reach record $348 million in July
Full Transcript
We’re gonna go ahead and get started here. So again, thank you for joining the GreenGrowthCPAs monthly cannabis industry update talking about news trends and also our special guests. Fiona ma again thank you for joining us, Fiona. All right. So before we get started, I need to let you guys know that the information contained in this presentation has meant for guidance purposes only, and that is professional legal or tax advice, and does not give any personalized legal tax investment or any business advice in general. So with that out of the way, let’s jump into the agenda and then right into the main event here. So first we’re going to chat with Fiona ma the California state treasurer. Get a little note, get to know a little bit more about her, ask her some questions about the industry. Then we’ll go over to some industry updates, talk about news articles, things that happened in the past 30 days that you should be aware of. And lastly, if you have any questions or you need help with your cannabis business, accounting, finance, anything related to that, and please reach out to us via our website at GreenGrowthCPA.Com or give us a call (800) 674-9050. So with all that out of the way, Fiona, welcome. Thank you for joining us today. We really appreciate taking the time to chat with our audience and share your thoughts about what’s going on.
Thank you. Thank you, Jim. hi Derek. nice to see you, Derek and I ran into a, early cannabis conference, you know, back on the queen Mary, I remember she’s been a great ally and a partner in this effort, but a little bit about me. I mean, I’m a CPA started with one of the big eight accounting firms left and started my own practice at the age of 28. Got very involved with small businesses, trying to help educate and of course represent them at all levels of government. Then I got elected to the San Francisco board of supervisors in 2002 to 2006 and San Francisco, as you know, is, the epicenter for medicinal cannabis, way back when, so prop two 15, was really, stemmed out of the efforts that San Francisco, started and then got elected to the state assembly 2006 to 2012 during the great recession.
cannabis was really not discussed at the legislature at all. And then when I got elected to the state board of equalization yeah, in 2000, 14, that’s the first time again, cannabis came back into my life and, we were supposed to collect sales taxes from the dispensary’s or the co-ops at the time. And, nobody really understood how to do it. companies, were filing for their sales tax permit. Some were not. And so we went on an educational around the state, just letting folks know that they have a responsibility to take out a sales tax license. They have to pay collected. How do you do it? but really tried to put a moratorium on trying to actively go after this industry, because one, it was still, an industry that was having a lot of difficulties in terms of, you know, hiring good CPAs, payroll companies, attorneys, also the, to Abe issue, as well as the lack of begging access.
And so we spent about a good three years going around and I kind of joked that I probably have a masters in Kevin point, just learning the different parts. And of course the legislature, was also actively engaged at this time. And I started doing tours. Then they started doing tours and I think they also found it was a very fascinating industry, one of the largest underground economic drivers in our, in our state. And then how do we, you know, prop 64, the advocates were trying to get the signatures and putting it on the ballot, but the legislators also wanted to enact laws in case prop 64 did not pass for those who are on the phone for any state initiative. If the voters pass it, it becomes the mandate or the law of the land. And so it would supersede anything that the legislature was doing.
Haven’t been parallel paths, but prop 64 did pass and all the legislative efforts went, yeah, no tents to the back burner, but the legislature is still actively sponsoring and hearing bills. There is right now about five different cannabis related bills that are moving through the legislature. The assembly does not have floor session today. They will be returning back to the floor tomorrow. And so they probably will be hearing all of the five bills, tomorrow on the assembly floor. So that’s kind of where we are at this moment. in the meantime, done a lot of webinars and, you know, Derek and I did a Cal CPA cannabis forum. And so there’s a lot of interest from attorneys, from CPAs, from investors, in terms of what is happening in this industry. And of course the state banking act, everyone’s asking, when are we going to get banking access?
Yes, I did testify early last year at the, in Congress, in the house subcommittee, on financial services. And that was the first time that the, Congress had heard any type of cannabis bill. And this was really on the state banking act and the Perlmutter bill, since then it did pass, the house, overwhelmingly with a lot of bipartisan support. And again, it is stalled in the Senate. Nancy Pelosi, tried to put the safe banking act into the heroes app that was also passed by the house. But the hero is also stalled because of the us Senate and the heads of the banking committees are Republican that do not like any type of cannabis. So that’s where we’re at right now. We have an election on November 3rd. I hope that everyone will get out of boat is important all over the U S if we want to have some sort of access to cannabis and 280E reforms, I’m a Democrat. So I’m going to ask you all to tell your friends and family to vote. especially for us senators, we could split the U S Senate. Then I think we have a chance of getting some sort of major, major reforms that will help the whole industry.
Gotcha. Beautiful. Thank you for explaining all that color and context to, you know, your past and how you’ve gotten to where we are today for California. And as we know, the winds go from West to East, from calc for cannabis, you know, whatever happens in California because model legislation for everywhere else. So you’re at the forefront. You’re seeing a lot of great things back to just banking real quick, you know, say that the safe baking act gets stalled and things of that nature. What can we do in the state of California, either state chartered banks to help get access to particular banking for either California businesses? Is there anything on the horizon for that I saw you submitted with other, California state treasurers to hate, really push and submitted a referendum to get this stuff put into the heroes act and other acts, what California specific scenarios can we look at if we don’t work on the national level here?
Yeah, I mean, there are probably a dozen banks in California that are actively begging the cannabis industry openly. obviously, you know, cannabis is very complicated, you have different, management structures and, so, we really, really need more backs, to be able to beg, there was also a movement. I think it was AB three 10, sponsored by somebody member, Miguel Santiago and assembly member to, to create a state public bank and the state public bank. The mission is really to bank those that are underserved or, you know, unbanked in our community. And I would consider cannabis. One of those constituents that hopefully will be able to utilize, that platform, if that ever comes, to, to fruition. We had a hearing informational hearing, we all committed to work together because you need to stand up, have a baggie to stand up the bank. You need to maybe have collateral if they’re going to be making loads. I mean, it’s just not that easy just to say, Hey, we’re going to just do it and open up our doors. So we are committed to working with the public bank advocates over the next six months to see whether we can get something through the legislative process next year.
Fantastic. And that, that would be much appreciated. Yeah. We always say we want banking, but you can’t just snap your fingers and it shows up, you know, there’s a lot of processing in the background. So just color and context, understand that there’s a lot of fighting effort. You know, there are people trying to be the champions or they are the champions of the cannabis industry, and it just takes a lot of, you know, accuracy to move things forward. So kind of building on top of that, we’re coming up on three years on January 1st, 2021, there’s going to be a lot of potential tax revenue. That’s either been collected, but a fair amount. That’s not been collected either sales tax, not calculated properly from origin and destination. Many of the complexities that kind of build up what California is in their tax structure. Is there any kind of, you know, rumbles within the CTFA just start approaching more cannabis businesses about, Hey, your sales tax is not being done properly or anything to kind of remedy what we see as potential client, compliance issues, right? Any kind of CPA or audit firm that goes in, you’re going to find some compliance issues, but specifically around sales tax, what are your thoughts around that for the CDTF fair, we’re going to be starting to fishing and looking for more issues?
Well, I mean, when I was on the board of equalization, we were overseeing the sales tax program. And then, the governor took it over and created a new, department of the California department of tax and fee under the governor’s office. So to the extent that the industry has issues, I would encourage you to let me know, let others know. I haven’t been engaged as much with the CDTF and sales taxes, as, as before, but I’m always willing to help. And of course we have now a lot more advocates in the legislature, if there is some sort of loophole that needs to be closed or something that is really, disproportionately impacting the community, definitely let me know. And I’m sure we’ll have any problems finding any authors, to jump on board to sponsor, legislation,
For sure. That makes sense. And yeah, that’s it. Thank you for answering that. It makes sense. I want to also another question that came in earlier, it was submitted by, Maya. She says specific to California analyst projected. That’s going to be at least five years for the legal cannabis legal cannabis market to outweigh the current customers that are in the illicit market here. So what steps is California taken to accelerate this reversal from the illicit market to the legal market cause patients and customers they’re adding 20 to 28% on their tax for their cannabis. You know, they can easily go to these, you know, cowboy shops or, you know, the wild, wild West shops out here. What are we doing in either tax decide or any kind of legislature moves to push this market forward to kind of STEM the growth of the illicit market? Cause that’s one of the biggest things we hear from our audience and any other clients we go out to is like, Hey, we’re getting crushed by the people that are not paying their taxes, people that are not abiding by that regulation. So aside from taxes, is there anything else or talk about taxes? That’s fine too. What are we doing to help this legal market grow?
Yeah, I mean, [inaudible], I know that the governor’s office, was really working to streamline right now. I think there’s five different agencies, that are dealing with cannabis and really trying to combine it under one agency. So have more of a one stop shop for cannabis. And instead of trying to call different agencies, they were really, really working on it. But obviously now post COVID or in the midst of COVID, that whole initiative has slowed down. there have been a number of bills to reduce, the, distribution tax. For example, Rob Bonta had a bill last season, this season, to reduce the 15% to 11 to suspend the cultivation tax. I was also a sponsor, a cosponsor of that effort. Cause I do think, the taxes are way, way too high and it’s creating this, you know, inequity and imbalance.
And especially now, I mean, you can’t really send government workers to do enforcement or audits, right? So that’s also contributing to what is happening in the marketplace. But I guess the silver lining is that cannabis is considered an essential business and everybody’s been able to operate, continuously since March 16th. So at least for all the inequities, at least this is one silver lining. And I think some of the cannabis, bigger cannabis, dispensary’s and companies are doing well at this moment. Yes, there is lack of enforcement. And until we are able to get back to normal where you can send, you know, auditors out and inspectors out, unfortunately it’s, it’s, it’s the way it’s going to be, but you know, government government will come back. You know, one thing we’ve learned right, Derek is pay your taxes. So we would encourage everyone to do their best to make sure they keep on the payment schedule because when the auditor does come knocking on your door, they aren’t going to go back and they can go back 10 years.
If they think that you are, you know, fraudulent, really, not paying your taxes. And so when they do, as Derek knows, I mean, many companies get a huge tax liability and it’s based on what CTFA thinks that you owe. and it’s always much, much higher and inflated because the onus is back on the business owner to come and prove that that number is way too high. And this is the actually the number that, that they actually owe. Plus they slap on interest in penalties from the date of assessment. So please, please continue to pay your taxes.
Yes. Continue to continue to pay your taxes and yeah. Keeping great records, right? Audits about financial reconstruction and make sure you have your records work with someone who’s competent in the industry knows what you need to save, knows what you need to toss. Probably toss that thing, keep everything
Was everything. Yeah. Because when they do come back and if you’re not complying with their audit, they are going to shut you down. They’re going to levy all of your bank accounts. They’re going to take the money out. You’re going to be stuck in this cycle of not being able to get out until you resolve your taxes that could take years.
And it’s refreshing to hear you say, Hey, taxes are a little too high and they are suppressing and creating an inequity in the industry. So thank you for sharing that. one of the programs I saw that you put out during COVID was one of these $50,000 bridge loans on sales tax. how’s that going have cannabis companies, anybody taken advantage of that, in the macro for the whole economy and in California, how’s that particular program going? Cause that was one of the only programs that allowed cannabis businesses, at least retail to have some type of relief, bridge loan, 50 K’s a lot to help you out here. So how’s that, how’s that working out?
Yeah. I mean, I, I’m not keeping track, like I said, it’s under the governor’s office. Derek can probably talk about his clients, whether they took advantage of it. we were very hopeful that when the eye bank, created this small business loan program, I think it was $58 million. The governor gave to, to bank, to loan out to businesses that were not eligible for PPP or EIDM, which is all the cannabis. we thought that that would also be an Avenue to help cannabis businesses. However, they did one loan. The, I then did one loan and then shut down the program. And we’re not really sure why, but I think, you know, part of it is that like federal state banking, issue. And so let’s see what happens November 3rd. Okay. People we need to exercise your right to vote and show up and get all of your friends and family to vote also
A hundred percent, a hundred percent. So, another question here we’ve got, so, you know, you’re looking at, you know, promoting and trying to split the Senate, right? We’ve got Republicans that, you know, they speak out against cannabis and then they leave the office and then they’re now in cannabis, you know, mr. John B, I’m not gonna name any names, but you know, he comes out and now he’s in the cannabis industry. So is this something that you see that’s consistent with, people that they do, one thing for the public phase, but then their personal pocket book or their investment portfolio dictates their actions otherwise is, you know, tell me a little bit more about your thoughts on that. If you have thoughts on
Yeah. I mean, you know, there’s a lot of hypocrites out there in the world, right. And I always say for those politicians that yell the loudest about an issue, they’re probably doing something, you know, outside the public, you know, the public realm. and so yes, unfortunately unless you, unless the media is, you know, pointing it out that these folks, you know, maybe their sons or their daughters are in the industry and yet they’re out there making it difficult for the industry. that’s really the only way that we’re going to be able to hold these people accountable to what they’re saying to their constituents, but elected officials, we are elected by our constituents and, you know, some feel stronger than others, about certain issues and making it a platform issue. For example, for those that do I hope none of their family members are in the cannabis business because if someone wants to do with some op-ed, well, let’s see what comes out of their closet. Right. So what happens with elected officials? You know, you have skeletons in your closet during an election. People will find it.
Oh yeah, for sure. The passion around politics right now, there’s a lot of, you know, people out there that they’re ready to dig and they’re ready to find the breadcrumbs that lead back to the basket here. So a few last questions here, and then we’ll let you hop off. from Michael, he asks, will there be any to ADE relief? I know with California, I believe you can kind of bypass two 80 and not really adhere to it, for your state taxes, but is there any kind of support in helping to move to ADE relief? Right. There’s like the legalization of cannabis, but also the rescheduling of cannabis. you know, talk about your thoughts on that. Uh state-wise or national wise, who’ve been part of any conversations that relate to, to ADE and things we can potentially look forward to.
Yeah. So I’m proud in California that we did pass legislation that allows businesses to deduct their ordinary and necessary business expenses against their income, just like every other business. because we pass prop two 15 and prop 64, it is the mandate of the people, the law of the land, and, you know, our legislature and our governor is very, you know, supportive, trying to do whatever we can to help the industry grow and thrive so that, there was a 10% penalty. If you paid your income taxes, franchise tax board, or your sales taxes in cash, we removed that barrier. The federal government still assesses a 10% penalty if you pay in cash. but the two 80 issue, again, just like our safe banking act, it has to go through Congress in Congress. The president has to sign a bill. So that’s where we’re stuck again on prop, on the two 80 issue. It’ll probably pass Congress, but probably stuck in the U S Senate again.
Gotcha. It makes sense. So thank you for sharing that. one from here from John, yes. Will there be adequate funding for enforcement, especially like, you know, stopping these, illegal grow operations, right. It’s very easy to, you know, pop up and start to grow and maybe you make your $200,000 and you’re, you’re out of the industry for a little bit. How are we allocating the potential tax revenues? I saw, we collected a lot of money over the past year. I think we are up like 175% in revenue year over year for Q2. You know, what are some programs potentially that we’re doing for enforcement of, pushing them. Then I asked a little bit about that in a previous question, but just want to ask you specifically.
Yeah. So I’m in prop prop 64. there was very specific uses of the revenue, enforcement education, you know, all of that. So, there is, prescribed uses for the revenues that come in to the extent that we generate more revenues, more of those programs will be, will be funded, especially law enforcement. but again, right now with COVID-19 stay in place, you know, a lot of the, I think, the, who is hiring a lot of folks for enforcement, I don’t know the five agencies anyway. One of them had a lot of pies for full time employees. I’m not sure whether they build them yet, especially during this time. And so again, everything the timelines have all been pushed back a little until we get through this pandemic.
Gotcha. Yeah, that brings up another question. Someone said, what are we doing to streamline the regulations? Look, it’s probably going to be a post coerced situation. When we get back on track, we limit the number of agencies. I think it’s like eight agencies you’ve got to speak with and coordinate with to get an application approved. So, you know, I know that’s a tough thing for the entrepreneurs. It’s a tough thing for legislators to, you know, everyone wants to make sure that their part of the body is being heard and it just takes time. So, yeah.
And I would encourage the industry when I started doing this back in, 2012, we would have calls and nobody wanted to show their face. Like nothing could be filmed. Nobody wanted to have their names publicized because they were scared. And, you know, Derek was one of the first people that’s like, I’m Derek Davis. And all I do is cannabis tax. You actually promote it. And he’s like, yup. I promoted it’s on my website. It’s like, this is card. I’m like, Whoa, it’s in your, your, you know, it’s his name of his company was in an email. and I think with people like Derek, peeking out feeling more comfortable that, that this is a legitimate business in California. Please also reach out to your legislators, their local officials, right? I mean, some teachers are still not, permitting any type of cannabis operations, and it’s generating a lot of tax revenue, for those that do allow.
And so now with the whole budget deficit, people are looking more seriously about, about permitting some form of cannabis, just to generate the taxes, talk to your local officials, talk to your stomach members, your Senator. And of course the governor, now is your time do not, you know, I always say, if you do not speak up, I cannot read your mind. Okay. We cannot read your mind. So you, as an industry, I know there’s a lot of associations out there. Get involved, speak up as an association, speak up as individual business owners, as constituents, you know, for us, we need to hear your voices loud and often just like other people, right? The squeaky wheel does get the grease. It
That’s exactly. I was just going to say that and such a coin phrase, but that’s, whatever’s allowed us is what we’re going to address right away. So, and yeah, that kind of leads me into the next one. You know, some, I think it’s like 65 to 75% of state cities in California are not licensing or they have prohibited. I saw there’s a kind of a battle between, I think 24, 25 cities. It’s the BCC where they’re like, Hey, we want delivery at least to your areas. We’ve got these cannabis deserts. What thoughts would you have? Or what specifically would you share with either local town officials or legislators? What are the few things of why they should open up this licensing, not limit and create these cannabis deserts? You know, what thoughts do you have for, these, you know, these other, politicians out there that are pushing against cannabis? How can this help them out in these times?
Well, I, I think for those that, maybe adamantly opposed, they may not be the most educated in terms of where the industry has gone. I’ve had carpal tunnel on my right hand and I can do to, you know, an ointment, CBD, you know, sometimes I can’t sleep at night and, and using a CBD to sleep. not everything has THC in it, but everybody is a lot of people are, are using different products for different reasons. And I would just ask you to invite your legislator, your elected official to see your operation, right. you know, how you’re keeping track of taxes, how you’re keeping track of, you know, constituents, all of the packaging. I mean, it’s childproof packaging, you have to insert, you know, a lot of information. and the industry has really, really changed. I mean, you go into some stores and it’s like an store like, Whoa. And then as soon as someone says that, and then you tell them how much taxes they’re generating. And they’re like, Whoa, this is really amazing. So it’s not just in the back alley in some corner anymore, but these are real retail, you know, tax, paying law, abiding businesses right now. So, you know, if you have a dispensary or a testing facility delivery facility, you don’t invite your elected officials to come and check it out.
That’s great. Great there. Yeah. Get them to see what it’s really like. It’s not what it’s on the TV stations or Netflix. This is not Narcos. You guys, this is real legitimate business. I will tie it up with one last question here. Just a one for us here. November 3rd, you know, say that we get, Biden and Kamala Harris. I’ll be going to see a Senator, ma we’re going to go for a Senate seat potentially here in one of your next runs.
it’s always nice to be part of the discussion, you know, but I have spent 25 years in politics here in California. I was born and raised in New York like Derek, and you know what it takes to understand California politics. It is an art, it is a science, and I’m staying here in California.
All right. Sounds good. Well, thank you again very much for your time is if there’s anything else you’d like to share, you have the floor.
no. Oh, since I have you guys, please make sure you fill out your census forms. we have until September 31st, every dollar we get from the federal government for important services and programs is allocated to the States based on our census related data in the CARES act. For example, we got $9.2 billion based on how many people we counted 10 years ago. we have about 11 million people that are hard to count, maybe some in the cannabis industry, because they haven’t been used to, you know, registering to vote and doing all those things. but now is the time because as our population grows, as we depend more on the federal government for funding, as you can see, we need to make sure everybody is counted. So the website is www.my 2020 census.gov. It is nine easy questions. It takes less than two minutes if you’re not sure you did it, just hop on the website and check again. And basically it is account for households as of April 1st. So if some of your kids have come back from school, I got a lot of questions. Do we count them? Are they supposed to count at school, count them if they were in your home as of April 1st, but make sure they’re counted. Sometimes kids that, young people at universities, they do their own household census, but if they did not do it and make sure you’re including your children, and your dependents under your census household.
Awesome. Get out there, make sure you’re participating in your local elections and the local conversation with the conversation’s happening, jump in and be a part of that conversation. So again, Fiona, thank you very much for your time. I appreciate you taking the time to, to chat with our audience, share your thoughts, answer some questions. And you know, you can go ahead and hop off. Now. I know you’ve got a busy day ahead of more meetings and more presentations, but again, thank you
Very much. Thank you so much, Fiona. Thank you.