San Francisco’s Vapor Room cannabis dispensary has faced plenty of foes since it opened in 2003. It brawled in federal courtrooms with the IRS and was hit during crackdowns by the U.S. Justice Department. But now that weed is legal, it appears the one thing the storied dispensary can’t survive is California’s legal weed market.
The dispensary is at risk of going out of business because of $250,000 in tax debt it owes to the state of California, according to founder Martin Olive. He blamed the pot shop’s tough financial situation on slumping sales caused by street problems in his SoMa neighborhood, as well as high cannabis taxes and penalties from the state.
“We’re at a crunch point now where things are looking more dire than they’ve ever been,” Olive wrote in a LinkedIn post last week where he called for “lenders, credit lines, investors, angels, and/ or a miracle to get us out of some critical debt.”
The Vapor Room’s problems come as cannabis businesses across the state struggle to stay alive, with thousands of companies going out of business and taxes going unpaid. The industry owes the state nearly $1.3 billion in late taxes and penalties, according to the California Department of Tax and Fee Administration.
High cannabis taxes are frequently blamed for making the state’s legal pot industry unsustainable, yet state tax rates are set to move even higher. Come July, the state plans to increase cannabis excise taxes by 25%, a prospect that is sending panic across the industry, with some warning that it could be the “nail in the coffin” for many legal weed businesses.
H/T: www.sfgate.com
