Catalyst Cannabis Co.

Since legalizing in 2016, California has experienced rampant rate failure across its licensed cannabis companies. The State of California also has some of the highest and most aggressive cannabis taxes in the nation. In an effort to stave off the California Department of Tax and Fee Administration’s (CDTFA) latest round of rulemaking that would, among other things, extend cannabis excise taxes to cannabis accessories, Catalyst Cannabis Co. is in a complex challenge with CDTFA over its rulemaking authority. 🎙️In this podcast episode, Husch Blackwell's Hilary Bricken and Anthony Almaz, General Counsel for Catalyst Cannabis, explore this potential crucial fight between the industry and California’s top tax regulator: https://lnkd.in/gf3r74iE

❗ Major Cannabis Industry Legal Update ❗ MAJOR INDUSTRY VICTORY. Many of you are aware that California cities often use Development Agreement’s (“DA”) in lieu of, or in addition to, passing a Tax Measure to capitalize on the perceived "Green Rush" and fill budgetary gaps at the expense of a struggling business. Since there is no actual “development” involved, the purpose of the DAs in this context is to force businesses to pay a "tax" (often disguised as a “Community Benefit Fee” or “Public Benefit Fee”) as a condition of licensure. Any business that fails to pay the “tax” faces the threat of its license being revoked, which the City of Patterson sought to do to Catalyst – Patterson.    But we fought back – and I am proud to say that Catalyst Cannabis Co. and its partners in Catalyst - Patterson secured a MAJOR victory last week in Stanislaus County, where the Court granted our Preliminary Injunction request to enjoin the City from revoking the Catalyst - Paterson's cannabis license for failure to pay the DA’s unlawful "Public Benefit” fee requirements.   Specifically, the Court ruled that we had established a probability of success on the merits on our claims that the City's DA, and its Public Benefits fee requirements, violate "Mitigation Fee Act" and constitute an unlawful "taking" in violation of the both the U.S. and California Constitutions.   While the case is far from over, this ruling immediately calls into question the legitimacy and propriety of existing Development Agreements that are used to extort cannabis businesses across the state. A huge thank you to our outside-counsel Jeff Augustini for securing this for us, and a huge thank you to our CEO, Elliot Lewis, for always pushing back when others would buckle or surrender. You saved a lot of jobs today.

This is the best deal I’ve found in the legal market. Connected Cannabis Co. and Catalyst Cannabis Co. have come together to consistently have a variety of these 14g bags of “smalls” (I say smalls because they are nice size nugs) in stock and at a ridiculous price. $78.40 out the door. This has been my go to for the last several months. Fresh pack dates - this one was 12/19… honestly one of the oldest I’ve purchased. A testament to their ability to sell through the inventory. What other great deals have you come across? I love checking out new shops, but some times the taxes make the out the door price unreasonable. Good stuff Elliot Lewis !!! Will do some r and d on the nightshade later today with Matt Nissenbaum.

Shout to MJBIZ for covering CDTFA story Good read !! #WFTP

Coastal Sun Sales 2023 What can we say - CA consumers are speaking and they're shouting WE LOVE #ORGANICCANNABIS A stellar year by all measures. What could have been a disaster with Herbl folding, stiffing us and other brands, turned out pretty pretty good. Really want to THANK everyone who dug in their heels and made lemonade from the lemons.... Coastal Sun Farm increased wholesale revenue by over 40% YOY Every year we set the goal of improving sales by 28% which allows us to grow methodically and organically. This year we beat even our own expectations by an additional 14%! It's funny when we meet retail buyers for the first time telling us "My customers don't even know what organic is" or "I know my customers and they just want the cheapest thing they can buy". With that attitude, you should be purchasing for a Dollar General or Family Dollar Store. NO consumer wants the cheapest thing they can buy! Consumers want affordable quality, and in cannabis nothing says AFFORDABLE QUALITY better than organic weed at the same price of conventionally grown competitors. We have the sell-through numbers to show it. Mad props to Herbl sales team who started the 2023 with us and ended the year at HYROAD still repping our wares with a smile Chris Bonham Johnny Stange Grant Hiramine Anthony Moraga Matt Perunovich Huge thanks to our entire retail partner network - Elliot Lewis & the Catalyst stores, Gold Flora stores, and all others. We appreciate you giving us the opportunity to share the organic cannabis movement. Thanks to our inside sales & merchandising team Scott Miller Dayna Z. Rose Mann Rebecca Olmos Our partner farms who co-brand organic cannabis under the Coastal Sun brand. MOST important to our production team who improved on all measures of efficiency & profitability. Excited about the possibilities for 2024

If a vape pen is sold for $40 at a California cannabis dispensary but only contains $5 of actual cannabis oil, should retailers be collecting the state’s 15% cannabis excise tax on the entire purchase? This question is at the heart of a lawsuit filed Dec. 28 by HNHPC Inc., which operates one of Catalyst Cannabis Co. 's 26 branded dispensaries in the Golden State, where a fight to exclude “cannabis accessories” from the state’s cannabis excise tax is now in the Superior Court of California, Orange County. Read more about the company's legal challenge against the California Department of Tax and Fee Administration with input from Anthony Almaz, general counsel at Catalyst. ⤵

❗Major Cannabis Industry Legal Update❗   Catalyst Cannabis Co. has initiated a lawsuit seeking to invalidate “Emergency” Regulation 3802 and “Emergency” amendment to Regulation 3700(i) in what we believe will be one of the most impactful lawsuits facing the industry to date.   This lawsuit not only impacts the financial health of the deteriorating cannabis industry by preventing an unauthorized expansion of the cannabis excise tax base - but it also calls into question how much trust we should place in our Government Institutions.   Everyone should be paying attention:   Administrative Law Colleagues - - - what would you say if I told you that the CDTFA gave the Interested Parties Notice and a copy of the provisions of a “emergency” Regulation 3802 - but, then, during its review period, the OAL and CDTFA made a concerted effort to substantially modify the provisions of Regulation 3802 AND amend a permanent Regulation without disclosing the changes to the public or giving them an opportunity to comment? (FYI we only found out via Public Records Request).   SALT and General Tax Practitioners - - - how would you respond when a Tax Statute is clear on its face and the Tax Authority promulgates a regulation affirming an interpretation. However, upon realizing the interpretation results in significant tax savings, the Tax Authority promulgates contradictory “emergency regulations” based on nothing more than made up concepts such as “optional tangible personal property”? Please let me know if you've ever heard of this concept in California tax jurisprudence.   Constitutional Law Colleagues - - - what would you say if I told you that the CDTFA created an “interpretive regulation” that is - without exaggeration - devoid of any analysis of the statute it seeks to interpret in response to an ongoing tax audit involving the same issue?   Most importantly, for everyone reading this thread - - - what would you say if I told you that some of our Government Agencies tasked with administering laws passed by your Legislature believes it has the right to disagree and disregard those laws for self-serving reasons? We here at Catalyst Cannabis Co. believe that this case is nothing more than the culmination of the abuse the industry suffers as “third-class businesses” at the hands of our Governing Agencies. We also believe this case will highlight just how far our agencies will go to enforce its own desires on the public, despite the basic principles of separation of powers. A huge thank you to my co-counsel, Jeff Augustini, for helping us bring the fight to the CDTFA and OAL and being able to tell this multi-faceted and highly technical legal claim in a way that conveys the many abuses brought on by the agencies. And a huge thank you to Elliot Lewis for being the type of leader that is willing to fight the good fight on behalf of an entire industry.

Here’s a tutorial on how to file. Let’s mount up and roll….in our opinion, there is no legal reason to pay excise tax on cannabis accessories. Mount up let’s ride. Stronger together !!! Disclaimer : this is not legal advice and new emergency regulations passed by CDTFA 3800 and 3802 are in contradiction to this post. Our moment is now !!!!! #WFTP

I hope the Cannabis Industry, SALT Attorneys, and Administrative Law Attorneys have been paying attention. Right now, the California Department of Tax and Fee Administration (CDTFA) is attempting to use its emergency rulemaking authority, which is set to expire in three weeks, to dramatically expand the cannabis excise tax base. Here's what's happening: Under the current reading of the statutes and CDTFA regulations, the cannabis excise tax is imposed only on the retail sales of "cannabis" and "cannabis products" (as defined in the Cannabis Tax Law). Dissatisfied with this limitation, the CDTFA created Regulation 3802 to prevent cannabis retailers from excluding "cannabis accessories" (another defined term) from the calculation of "gross receipts" for purposes of the 15% cannabis excise tax. The CDTFA justifies this expansion by claiming - without analysis - that the Cannabis Tax Law statutes make clear that sales of ALL TANGIBLE PROPERTY by a Cannabis Retailer is subject to the 15% cannabis excise tax. Then, on December 5, the CDTFA submitted Proposed Emergency Regulation 3802 to the Office of Administrative Law (OAL) for approval and publication. We here at Catalyst believe that the CDTFA lacks any authority, emergency or otherwise, to promulgate Regulation 3802, and Catalyst is taking every step to prevent its enactment. Feel free to review our submission to the OAL urging them to disapproved 3802. If you agree, please submit a written comment to the OAL as soon as possible.