California authorities have recently held an auction to sell personal property that was confiscated from 10 cannabis businesses in Los Angeles. The items included glass bongs, pipes, furniture, electronics, and even a snow cone machine. The auction was part of the state’s efforts to recover unpaid taxes and crack down on illegal cannabis operations.
Why the Auction?
The California Department of Tax and Fee Administration (CDTFA) said that the 10 cannabis businesses owed more than $14.4 million in unpaid taxes. Nine of them were operating illegally without a state license, and one was a licensed dispensary that failed to pay its taxes. The CDTFA and the California Highway Patrol (CHP) seized the property while executing search warrants against the businesses.
Seizing and auctioning property from cannabis businesses that evade the law is a tool to recover the taxes owed to the state, said CDTFA Director Nick Maduros in a statement. He added that unlicensed cannabis operators not only undercut legitimate businesses, but also cheat California communities out of revenue for vital programs.
The auction, which took place on Friday, February 16, 2024, was the first of its kind in California. Previously, the state had only auctioned off commercial property, such as buildings and land, that was seized from delinquent cannabis businesses. The CDTFA said that the proceeds from the auction would be applied to the unpaid liabilities of the 10 businesses.
What Was Sold?
The items that were sold at the auction were grouped into lots, and potential buyers had to bid on the entire lot if they wanted a specific item. The lots included various types of cannabis paraphernalia, such as glass bongs, pipes, grinders, scales, and rolling papers. Some of the bongs were branded with logos of popular cannabis strains, such as Blue Dream, OG Kush, and Sour Diesel.
The auction also featured items that were not directly related to cannabis, such as furniture, electronics, appliances, and office supplies. Some of the notable items were a La-Z-Boy recliner, a snow cone machine, a money counter, a sandwich board, a framed poster of Bob Marley, and a neon sign that read “Open 24 Hours”.
The CDTFA did not disclose how much money was raised from the auction, or how many people participated. However, some of the bidders said that they were looking for bargains, or that they were curious about the items. One bidder, who identified himself as John, said that he was a collector of glass bongs, and that he was hoping to find some rare pieces. Another bidder, who gave her name as Lisa, said that she was a cannabis enthusiast, and that she wanted to support the legal industry.
What Is the State of Cannabis in California?
California legalized recreational cannabis in 2016, but the industry has faced many challenges since then. One of the main issues is the persistence of the illegal market, which competes with the legal market by offering lower prices and avoiding taxes and regulations. According to a report by the United Cannabis Business Association, an estimated 75% of the cannabis sales in California are from the illicit market.
The state has been trying to curb the illegal market by increasing enforcement and reducing barriers to entry for the legal market. In 2022, the state launched the Unified Cannabis Enforcement Taskforce, which is composed of various agencies, such as the CDTFA, the CHP, the Bureau of Cannabis Control, and the Department of Fish and Wildlife. The taskforce said that it had seized about 190,000 pounds of illicit cannabis, valued at nearly $312 million, during its first year of operation.
The state has also been working to streamline the licensing process, lower the tax rates, and expand the access to the legal market for consumers and businesses. The state legislature passed several bills in 2023 that aimed to improve the cannabis industry, such as allowing home delivery, creating a cannabis equity program, and extending the provisional licenses for existing businesses. The state also launched a public awareness campaign, called “Get #weedwise”, to educate consumers about the benefits of buying from licensed sources.
The state hopes that these measures will help the legal cannabis industry grow and thrive, and generate more revenue for the state and local governments. According to the CDTFA, the state collected about $817 million in cannabis tax revenue in the fiscal year 2022-23, which was a 55% increase from the previous year. The state expects to collect about $1 billion in cannabis tax revenue in the current fiscal year.
