Request A Case Evaluation Or Tax Resolution Development Plan

Cannabis Operators Deemed “Essential” in California And Are Eligible To Receive The COVID-19 Vaccine

Cannabis Retailer workers have been moved up to PHASE 1A in Governor Newsom’s COVID-19 Vaccine Allocation Guidelines released February 4, 2021.

Updated COVID-19 Vaccine Allocation Guidelines

Based on available supply, individuals described below are or will be eligible for COVID-19 vaccines:

  • Phase 1A, all tiers
  • Phase 1B, Tier 1:
    • Persons 65 years of age and older
    • Sector populations: Education and Childcare, Emergency Services, Food and Agriculture.

Achieving equity

This age-based framework will be coupled with a vaccine distribution and engagement approach that prioritizes disproportionately impacted communities, settings, and populations to ensure those eligible for vaccines within these communities are more likely to receive it.

Minimizing disuse of scarce COVID-19 vaccine

To avoid wastage or disuse of scarce supplies and maximize their benefit to Californians:

  • Allocations of doses are made on the assumption that immunization will be accepted by some but not all who are offered the vaccine, and then adjust later allocations based on the number of doses that are accepted.
  • After focused and appropriate efforts to reach the groups prioritized at that moment, providers may offer vaccine promptly to persons in lower priority groups when:
    • Demand subsides in the current groups, or
    • Doses are about to expire according to labeling instructions.
  • Providers may temporarily adjust prioritization based on other resource constraints while continuing efforts to immunize higher priority groups as soon as feasible.

Phase 1A eligibility

Occupation:  Persons at risk of direct patient exposure in settings included in the Health Care and Public Health Sector from the CA Essential Workforce list. This includes both clinical and non-clinical roles.  In addition, workers who come into direct contact with the virus through research, development, manufacturing or testing are included.  Finally, workers who are manufacturing vaccine, therapeutics, devices, supplies or personal protective equipment supporting the COVID-19 response are included due to the adverse public health impact that delays in production would cause.

Section 7 of the updated guidelines provides that “Cannabis industry employees are included in Phase 1a for medicinal cannabis and Phase 1b Food and Agriculture for growing, production, storage, transport and distribution. Medical cannabis workers should be accommodated as necessary in Phase 1b, Tier 1, by nature of their designations in eligible essential workforce classifications.”

Anyone who qualifies as a worker in Phase 1A or Phase1B should contact the county where the cannabis business is located and request the vaccine.

What Are “Essential Businesses”?

State & local governments designate as “essential businesses” those businesses or firms that perform an essential government function. While the list may vary between different jurisdictions, they typically include:

  • Healthcare operations, including home health workers.
  • Essential infrastructure, including construction of housing and operation of public transportation and utilities.
  • Grocery stores, farmers markets, food banks, convenience stores.
  • Businesses that provide necessities of life for economically disadvantaged individuals and shelter facilities.
  • Pharmacies, healthcare supply stores and healthcare facilities.
  • Gas stations and auto repair facilities.
  • Garbage collection.
  • Hardware stores, plumbers, electricians, pool service, landscape maintenance, exterminators and other service providers necessary to maintain the safety, sanitation and essential operation of residences and other essential businesses.
  • Educational institutions, for the purposes of facilitating distance learning.
  • Laundromats, dry cleaners and laundry service providers.
  • Businesses that ship or deliver groceries, food and goods directly to residences.
  • Businesses that supply products needed for people to work from home, including electronic stores, mobile phone stores and office supply stores.
  • Airlines, taxis and other transportation providers offering services needed for essential activities.
  • Home-based care for seniors, adults or children.
  • Childcare facilities providing services that enable essential employees to go to work.
  • Roles required for any essential business to “maintain basic operations,” which include security, payroll and similar activities.
  • Hotels, motels and lawfully permitted vacation rentals and homesharing.

Are Cannabis Businesses “Essential Businesses”?

Again you need to check with your local jurisdiction but at the State level in California the California Department Of Health (CDPH) and the Bureau Of Cannabis Control (BCC) have issued orders making all cannabis retailers and the businesses that support them in the cannabis industry “essential” during the COVID-19 pandemic, allowing retailers, cultivators, and manufacturers to stay in operation. However, California cities and counties are able to enact their own rules regarding how patients and others may purchase cannabis so you should still check with your local government to see if any local rules apply.

All licensed cannabis businesses in good standing are included as “Essential Businesses” and must follow the existing terms of any local Order as written. Click here for the Order issued by the CDPH. Such Order typically requires that they, like all other Essential Businesses, establish practices that includes 6-foot distances between individuals, frequent 20-second hand-washing or hand-sanitizing, cough and sneeze covering, regularly cleaning high-touch surfaces, and avoiding all social greetings involving contact (handshaking, etc.). These best practices of authorized curbside pickup and contact-less delivery are expected to protect customers and employees by reducing contact.

State law still has no bearing on Federal law which declares cannabis to be illegal; but until Federal law changes, the cannabis industry will still have to bear the followings risks and challenges:

Higher Taxes Still Remain

It still remains to be seen when favorable changes will be made to the Internal Revenue Code which treats businesses in the marijuana industry differently resulting in such business paying at least 3-times as much in taxes as ordinary businesses.

Generally, businesses can deduct ordinary and necessary business expenses under I.R.C. §162. This includes wages, rent, supplies, etc. However, in 1982 Congress added I.R.C. §280E. Under §280E, taxpayers cannot deduct any amount for a trade or business where the trade or business consists of trafficking in controlled substances…which is prohibited by Federal law. Marijuana, including medical marijuana, is a controlled substance. What this means is that dispensaries and other businesses trafficking in marijuana have to report all of their income and cannot deduct rent, wages, and other expenses, making their marginal tax rate substantially higher than most other businesses.

Reporting Of Cash Payments Still Remain

The Bank Secrecy Act of 1970 (“BSA”) requires financial institutions in the United States to assist U.S. government agencies to detect and prevent money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, and file reports of cash purchases of these negotiable instruments of more than $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. The BSA requires any business receiving one or more related cash payments totaling more than $10,000 to file

IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.

The minimum penalty for failing to file EACH Form 8300 is $25,000 if the failure is due to an intentional or willful disregard of the cash reporting requirements. Penalties may also be imposed for causing, or attempting to cause, a trade or business to fail to file a required report; for causing, or attempting to cause, a trade or business to file a required report containing a material omission or misstatement of fact; or for structuring, or attempting to structure, transactions to avoid the reporting requirements. These violations may also be subject to criminal prosecution which, upon conviction, may result in imprisonment of up to 5 years or fines of up to $250,000 for individuals and $500,000 for corporations or both.

Marijuana-related businesses operate in an environment of cash transactions as many banks remain reluctant to do business with many in the marijuana industry. Like any cash-based business the IRS scrutinizes the amount of gross receipts to report and it is harder to prove to the IRS expenses paid in cash. So it is of most importance that the proper facilities and procedures be set up to maintain an adequate system of books and records.

How Do You Know Which Cannabis Tax Attorney Is Best For You?

Given that cannabis is still illegal under existing Federal law you need to protect yourself and your marijuana business from all challenges created by the U.S. government.  While cannabis is legal in California, that is not enough to protect you.  It’s coming down that the biggest risk is TAXES.  Be proactive and engage an experienced Cannabis Tax Attorney in your area. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County, Metropolitan Los Angeles (including Long Beach and Ontario) and other California locations protect you and maximize your net profits. And if you are involved in crypto currency, check out what a Bitcoin Tax Attorney can do for you.

    Request A Case Evaluation Or Tax Resolution Development Plan

    Get a Tax Resolution Development Plan from us first before you attempt to deal with the IRS. There are several options for you to meet or connect with Board Certified Tax Attorney Jeffrey B. Kahn. Jeff will review your situation and go over your options and best strategy to resolve your tax problems. This is more than a mere consultation. You will get the strategy or plan to move forward to resolve your tax problems! Jeff’s office can set up a date and time that is convenient for you. By the end of your Tax Resolution Development Plan Session, if you desire to hire us to implement the strategy or plan, Jeff would quote you our fees and apply in full the session fee paid for the Tax Resolution Development Plan Session.

    Types Of Initial Sessions:

    Most Popular GoToMeeting Virtual Tax Development Resolution Plan Session
    Maximum Duration: 60 minutes - Session
    Fee: $375.00 (Credited if hired*)
    Requires a computer, laptop, tablet or mobile device compatible with GoToMeeting. Please allow up to a 10-minute window following the appointment time for us to start the meeting. How secure is GoToMeeting? Your sessions are completely private and secure. All of GoToMeetings solutions feature end-to-end Secure Sockets Layer (SSL) and 128-bit Advanced Encryption Standard (AES) encryption. No unencrypted information is ever stored on our system.

    Face Time or Standard Telephone Tax Development Resolution Plan Session
    Maximum Duration: 60 minutes - Session
    Fee: $350.00 (Credited if hired*)
    Face Time requires an Apple device. Please allow up to a 10-minute window following the appointment time for us to get in contact with you. If you are located outside the U.S. please call us at the appointed time.

    Standard Fee Face-To-Face Tax Development Resolution Plan Session
    Maximum Duration: 60 minutes - Session
    Fee: $600.00 (Credited if hired*)
    Session is held at any of our offices or any other location you designate such as your financial adviser’s office or your accountant’s office, your place of business or your residence.

    Jeff’s office can take your credit card information to charge the session fee which secures your session.

    * The session fee is non-refundable and any allotted duration of time unused is not refunded; however, the full session fee will be applied as a credit toward future service if you choose to engage our firm.