Uruguay has always faced some tall hurdles to become the first country in the world to fully legalize recreational cannabis. The landmark 2013 reform was aimed at taking revenue streams from the sale of the soft drug out of the hands of organized crime while also improving public health by bringing users out of the shadows.
Local Jurisdictions Continue to Look to Cannabis Taxes to Fund Basic Programs
Many local governments in California continue to feel pinched by mounting expenses and decreased revenue from state and federal programs. While schools crumble and roads need repair, voters have refused to enact new taxes to fix local infrastructure and deal with crime and educational problems.
All Cannabis Tax Measures Pass Easily
Voters seem eager, however, to enact new cannabis taxes. The primary election in California on June 5, 2018 had several cannabis-related measures that passed easily:
- Measure T, Santa Barbara County passed with 75.7% of the votes. The measure gives the county supervisors the power to pass tax ordinance. The rate is not yet specified and will be set by any new ordinance.
- Measure B-18, San Luis Obispo County passed with 78.3% of the votes. This measure allows for a 4% business tax on cannabis gross receipts starting in July 2018. The tax will increase 2% ever year until the tax is a maximum of 10%.
- Measure CC in Pasadena passed with 59.9% the votes. The measure allows for six new dispensaries within city limits.
- Measure DD in Pasadena passed with 75.5% of the votes. This measure allows the city to collect a 6% business tax on retail cannabis sales, and a 4% on other cannabis-related businesses.
While cannabis taxes sail through elections, other tax measures aren’t so lucky. Lake County voters took down Measure G, with only 38.3% of the voters approving the proposed 1.5% increase in sales and use tax.
Taxnexus® Situs™ Allows California Cannabis Taxpayers to Cut Through the Chaos
BERKELEY, CALIF. May 7, 2018 — Taxnexus, Inc., a California startup that makes all forms of tax compliance simple, today announced the world’s first web service that delivers cannabis tax information. In California, local counties, cities, and towns have made over 450 tax rules that cover cannabis sales and business activity. Until today, there was no way for a cannabis retailer, cultivator or other taxpayer to easily find out what taxes apply to their business, therefore leaving it exposed to audits and heavy penalties. Now, Taxnexus Situs cuts through the chaos of cannabis tax confusion with a free website available at https://local.taxnexus.net.
Starting today, anyone may use Taxnexus Situs by entering the name or address of a business and then tapping Find Tax to generate a personalized list of cannabis-related taxes. Taxnexus Situs is accurate to the census block level, ensuring a taxpayer gets precise information. Taxnexus Situs uses a proprietary database of all available cannabis tax information in the United States and Canada.
“Taxnexus Situs offers the first practical interpretation of the new cannabis tax laws now being implemented in California’s local jurisdictions,” said Jasmine Davaloo, Esq., Chief Counsel and a Founder of Taxnexus. “Because Taxnexus continuously monitors for changes in tax law and keeps the Situs up-to-date, taxpayers can rely on the accuracy of Taxnexus Situs and focus on their businesses as cannabis tax laws change,” added Ms. Davaloo.
Taxnexus market research predicts cannabis consumption in the United States will reach $25 billion annually in 2022. In that year, Taxnexus estimates there will be over 49,000 cannabis taxpayers transmitting $5.5 billion in tax remittances, and the financial services consumed to calculate, store, transmit and remit cannabis and sales taxes will be $1.2 billion in 2022.
“We are excited by the prospect of being the first and only tax service provider in a new global consumer packaged goods industry,” said Vernon Keenan, CEO and a founder of Taxnexus. “California has a special group of business owners who have been living in the shadows for 20 years, and are now looking to come out into the light. Taxnexus does not copy the old ways of doing taxes, but invents new financial technology that makes tax compliance easier for every taxpayer,” added Mr. Keenan.
The Taxnexus suite of products, Taxnexus Situs, Taxnexus Base and Taxnexus Returns, enable cannabis taxpayers (retailers, cultivators, manufacturers, distributors, laboratories and others) to comply with the new and evolving tax regimens being introduced in the United States and Canada. Cannabis POS and ERP software developers will adapt their existing cloud and on-premises services to Taxnexus using Taxnexus API.
Taxnexus Situs (https://local.taxnexus.net) is a free service that is available today for California and will cover all of the United States and Canada by the end of 2018. Taxnexus Base and Taxnexus Returns are planned for late Summer 2018. Taxnexus API is currently available to qualified developers.
Taxnexus made its public debut by participating in the Direct Cannabis Network Seed Series pitch contest held in San Diego, California on April 29, 2018. “We are so pleased that Taxnexus picked DCN as a venue for their public debut. Making cannabis tax compliance easy is a critically unmet need in our quickly growing industry, “ said Adelia Carrillo, CEO and founder of Direct Cannabis Network. “We love the fact that more Silicon Valley people are coming into our industry with some heavy-duty IT firepower,” added Ms. Carrillo.
Taxnexus was founded on April 9, 2018 in Berkeley, California. The founders, Mr. Vernon Keenan, Chief Executive Officer, Mr. William De Zenzo, Vice President of Business Development and Ms. Jasmine Davaloo, Esq., Chief Counsel, represent over 65 years of Silicon Valley and California legal experience. Mr. Keenan has enjoyed positions at Northwestern University, Genentech, Oracle, Zona Research and Salesforce. In 2012, Mr. Keenan and Mr. De Zenzo co-founded Telnexus, a Berkeley-based communication service provider. In 2017, the Taxnexus founders saw the opportunity to provide tax service in California and the world.
PRESS CONTACT: Taxnexus CEO Vernon Keenan at email@example.com or (510) 679-1900.
Taxnexus, the Taxnexus logo, Taxnexus API, Taxnexus Situs, Taxnexus Base and Taxnexus Returns are all registered trademarks of Taxnexus, Inc. Copyright © 2018 by Taxnexus Inc. All rights reserved worldwide.
The news is filled nearly everyday about new cannabis taxes and regulations in our home state of California. There are new cannabis taxes on the books nearly every week! Any cannabis business who wants to be compliant is facing a huge challenge just to figure out what the cannabis taxes are in effect at its store or cultivation facility.
At Taxnexus, our mission is to be the leading experts on cannabis taxation, and to make it easy for cannabis taxpayers to keep compliant with simple web technology.
We have just completed our Spring 2018 survey of California cannabis taxes, and we’ve got some scary news. There are close to 500 different cannabis taxes now specified in city and county ordinances in California!
All cannabis tax stakeholders in California are now faced with a crushing information seeking burden. And, how are all the hundreds of towns, cities and counties in California with cannabis ordinances going to get out the news about their new taxes to the dispensaries, cultivators, manufacturers, distributors and delivery services?
At Taxnexus, we feel like this is a dangerous formula for financial noncompliance and can threaten the growth and development of the legal cannabis industry in California. That is why it is our mission to get the news out there and to help software developers get tax information into their apps as quickly as possible.
Introducing Taxnexus Situs
Now, figuring out what cannabis taxes a cannabis-related business is facing just got a whole lot easier. A free, new service being offered today by Taxnexus makes it easy to look up cannabis taxes by address:
From there, enter your address and click Find Tax. An address fragment or the name of an establishment is enough to get results.
Taxnexus Situs displays all the taxes that are currently active at that location, plus an accurate calculation of the California sales and use tax rate.
Taxnexus In California Today — 49 States To Go
Taxnexus Situs covers all of the active cannabis taxes in California as of 4/20/2018, and we’ll be rolling out more Adult-Use cannabis states throughout the rest of 2018. We have a sneak peak of Oregon if you’re curious about the taxes there. Look for Taxnexus to also offer a United States and Canada sales tax solution in 2019 with full nexus capabilities for e-commerce sellers.
And, What Is A Situs?
Situs (sī-təs) is a weird word that means a whole bunch to tax people. A Taxnexus Situs lookup is just a list of all of the specialty and consumption taxes that pertain to any specific street address. Our geographic database is smart enough to figure out what precise jurisdiction each address is in, ensuring 100% accuracy.
Try Taxnexus Situs Today
Taxnexus Situs aims to cut through the confusion generated by the California rollout of adult-use cannabis.
If you are a cannabis stakeholder, journalist, analyst or even just a curious consumer, now you have an accurate, easy-to-use service that accurately reports cannabis taxes by street address.
Keep Up With Taxnexus
Be sure to follow Taxnexus on Twitter or join our developer program to learn more about Taxnexus solutions for the cannabis industry and using Taxnexus API to build advanced tax capabilities right into your application.
Today is 420’s biggest celebration yet. With it comes lots of hype for the industry triggering dreams to get a piece of the action. Wise people often say that working while doing something you love is a key factor in a happy, fulfilling life. For many cannabis aficionados, that dream is to open a dispensary.
Launching a Canna-Business Requires Deep Pockets
Operating a marijuana dispensary can be like any other type of small business. However, getting it started can be much more expensive than you think, because of certain state regulations and other financial hurdles to overcome that don’t exist elsewhere.
Before you even sell your first gram, you must spend a good amount of money just to get a green light to open shop. One of the first steps in opening a dispensary is applying for a license and permit. While these fees vary from state to state, an accurate expectation would be to spend about $12,000+ on this piece alone. And it’s best to have an experienced professional do it for you, adding to the cost.
Finding a retail space that will allow a dispensary to operate on the premises is only half the battle, as you also need to find an area that has good visibility and ideally high foot traffic. Annual real estate expenses might run $100,000 plus the one-time cost of remodeling the space to your liking. The latter is likely to be your biggest start-up cost.
Once you’ve passed through the first set of monetary hurdles, you’re in a good position to become operational. Before opening day, remember that you’ll need a full Point of Sale and tracking system, a security system, and inventory to sell. POS contracts vary in price. They are an important part of your daily operations, and a big part of your operational costs. And stocking your shop with quality product should run at the rate of $1,800 per pound. Plus all the other processed plant products and other accessories. You better buy a lot.
Operational Costs High for Great Customer Experience
To run any business successfully, your employees must be capable and trained. The size of your shop will certainly dictate how many people you need on staff. Let’s assume you have a few quality budtenders, a supervisor, security and a store manager–you can expect your annual payroll to run close to $370,000 if you’re paying them at industry rates.
Other operational costs include your advertising budget. Depending on your location, and how many competitors you have, this could run up to $25,000 in a major market. It’s required to have insurance and a relationship with an attorney that specializes in Cannabis. Given that the cannabis industry is vulnerable in many ways, these annual costs will approach $50,000.
The Banks Aren’t Playing Along Yet
Marijuana dispensaries fall into a gray area in the business world, as they are technically illegal from a federal standpoint. Because of this, many banks don’t want to transact with a dispensary for their initial investments as well as their day to day needs.
To get around the issue with banks, owners will do business with credit unions or even private marijuana banks if they’re present in the area. This, too, comes with a cost. These organizations realize you might not have any other choice, and they can (and do) charge holding fees of about $2,000 per month.
And when applying for your license and permits, you must prove that you have enough capital to remain a viable company in the industry. Some states don’t require that you have any assets at all, but others like Pennsylvania stipulate that you have $2,000,000 in assets with at least $500,000 of it in liquid cash.
Preparing for Uncle Sam & Aunt Mary Jane
Are you overwhelmed yet by the true cost of opening a marijuana dispensary? There’s one final piece of the puzzle, which again varies dramatically from state to state. TAXES!
Most of the discussion about compliance in the cannabis industry centers around the product as it pertains to the quality, strength, and other regulations placed upon it. Rarely is there discussion about tax compliance, a costly and highly regulated part of the the business. Of course you have to pay specialty cannabis Taxes, but tracking and preparing the documents is specifically hard.
In California particularly, the tax code is chaotic. The code continues to evolve as tax jurisdictions work out the kinks. Staying on top of the tax code, with the ability to calculate, store, and file your cannabis taxes in a compliant manner can be an arduous and costly process in itself. Currently, dispensaries rely on difficult manual processes at POS (time consuming and human error involved), and use expensive accountants to extract and file the correct returns.
A fully automated system of calculating, storing, and filing all cannabis taxes along the product chain with compliance is exactly what the industry needs to stay tax compliant. Taxnexus delivers automated, transaction-to-treasury tax compliance services to the cannabis industry. In the crazy realm of cannabis taxes, from chaos comes clarity with Taxnexus.
Cause and Effect, Herb vs. Munchies
When it’s all said and done, the average cost of all the aspects we’ve mentioned is between $250,000 and $750,000. Less than it would cost to open a McDonalds, with a profit potential to greatly exceed any franchise opportunity. If you are fortunate enough to have lined up the investors, a bright future awaits. But if the process and cost outlined above put fear in your heart, consider being a vendor of munchies.
By Eric Stone
Taxnexus Product Representative
(April 20, 2018)