While California’s decision to eliminate the cannabis cultivation tax might be seen as great news for the industry, an expert is warning that it might be a little too late to keep growers in the state.
Mike Goral, National Cannabis Partner-in-Charge, Armanino LLP, who expressed the concern while speaking at this year’s Benzinga Cannabis Capital Conference in Chicago, said California is now just a matured market.
“A few years ago, all you needed was a license, and maybe a great location and money was just thrown at you because everybody knew that California was going to be the biggest market and then as it matured,” he explained.
According to Goral, “now, investors are looking for entities with a proven track record, with good books and records before they’re going to make that investment and the taxes are still very high. And in California, they eliminated the cultivation tax, which was great, but it’s a little too late.”
Painting a picture of what is happening in the state, he noted that the price of flower in California has dropped so much that it’s very difficult for companies to succeed. “So many of our clients are moving their brands from the West Coast to the East Coast, where it’s a more lucrative market.”
Armanino is one of the 20 largest independent accounting and business consulting firms in the U.S. and the preeminent provider of these services to the cannabis industry.
The company provides industry-leading accounting, tax, human resources, audit and consulting services tailored to the needs of growers, manufacturers, distributors, dispensaries and related businesses.
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