Cannabis operators in Los Angeles are currently facing one of the most challenging tax environments in the nation. Combined state and local taxes, comprising a 19% state excise tax, a 10% city cannabis business tax, and a 9.75% sales tax, push the effective tax rate on cannabis products to nearly 40%.
This high tax burden, along with escalating compliance costs and arduous licensing requirements, has created significant financial strain on operators, making it increasingly difficult for businesses to maintain profitability while staying fully compliant with city regulations. All licensees have felt this pressure, as delayed Department of Cannabis Relations (DCR) licensing opportunities, high startup costs, and limited access to capital continue to threaten the viability of these businesses in one of the most competitive national markets.
Over the past year and a half, industry advocates have been calling on the Los Angeles City Council to consider measures that would alleviate some of this strain, including reduced tax rates, tiered tax structures, and targeted financial relief programs. These reforms are intended to help sustain the legal market while advancing the social equity objectives embedded in the city’s cannabis program.
These days, legal cannabis operators fear the tax man more than illegal operators fear the law. Legal operators have been audited, with some hit with tax bills as high as $600,000 for alleged ‘improper accounting,’ according to the City. Under the current Office of Finance terms, these businesses are being forced into payment plans capped at just 12 months. Such demands are simply unrealistic and risk shutting down many legal operators for good.
Without urgent reform, the substantial tax burdens and aggressive repayment requirements threaten to devastate the entirety of the Los Angeles cannabis industry. This truly highlights the critical need for operators to proactively plan their tax strategies and maintain compliance in an evolving regulatory and financial landscape. At Manzuri Law, our team helps cannabis operators navigate these complex tax and regulatory challenges, offering strategies designed to protect businesses and support long-term success.
2026 Renewals Have Been Streamlined and Will Require Submission of a New Attestation LIC-4025-FORM
The 2026 license renewal period opened on Tuesday, September 2, 2025, and will remain open through Monday, November 3, 2025. The Department of Cannabis Regulation (DCR) has advised licensees that all required documents must be submitted no later than Saturday, November 1, 2025, and that renewal payments must be postmarked by Monday, November 3, 2025. Renewals that are not completed on time will incur substantial late fees.
This year, to renew a license in the City of Los Angeles, a renewal application will consist of the following forms:
- Public Health, Building & Operating Permits Attestation form (LIC-4025-FORM).
- A current Indemnification Agreement (LIC-4005-FORM).
- A current Ownership and Financial Interests Form (LIC-4008-FORM).
- Site control valid through December 31, 2026 (Lease Agreement or Property Deed).
- A current Business Premises Diagram.
Social equity applicants may also need to submit two additional forms:
- A current Successor In Interest Form (LIC-4018-FORM) [required for SEAs only]
- Phase 2, Tier 3 Applicant Attestation (LIC-4023-FORM) [REQ. for Phase 2, Tier 3 applicants only]
To streamline the 2026 renewal process, DCR now requires licensees to resubmit FORMS only if information has changed. Accordingly, if a FORM submitted during last year’s renewal remains current (and is on the current version of that FORM), the licensee may simply attest that no updates are needed, and resubmission will not be required.
Beginning this 2026 renewal cycle, a new form (LIC-4025-FORM) is required. This form asks licensees to make a series of attestations regarding compliance with LADBS plan check requirements. All of these attestations are steps that lead to the culmination of the licensing process in January 2031, whereby all LA operators will need to have an Operating Permit issued by the DCR.
Specifically, the following annual regulatory milestones will need to be met by all LA operators:
- For the renewal cycle beginning September 2025: Licensees must attest that they will (1) submit plans to LADBS for plan check, (2) obtain a Public Health Permit by September 1, 2026, and (3) secure all other LADBS clearances by that same date.
- For the renewal cycle beginning September 2026: Licensees must attest that (1) a Public Health Permit has been obtained and attached, (2) all LADBS clearances have been secured and documented with the summary worksheet attached, and (3) they understand the requirement to obtain a building permit by September 1, 2027.
- For the renewal cycle beginning September 2027: All licensees must obtain a building permit from LADBS for the cannabis-related activities identified in their DCR Application or License.
- For the renewal cycle beginning September 2029: All Licensees shall obtain a Certificate of Occupancy from LADBS for the cannabis related activities.
- January 1, 2031: all Licensees are required to obtain an Operating Permit from the DCR.
Partner with Manzuri Law to Protect Your Cannabis Business
The combination of crushing tax obligations and complex renewal requirements continues to challenge cannabis operators across Los Angeles. With the 2026 renewal cycle already underway and aggressive tax enforcement on the rise, now is the time to safeguard your operations.
At Manzuri Law, our experienced cannabis attorneys guide businesses through every stage of compliance—from proactive tax planning to renewal submissions and long-term regulatory strategy. Don’t let tax audits, repayment demands, or missed deadlines put your license or business at risk. Contact us today to schedule a consultation and ensure your company is positioned to succeed in California’s evolving cannabis market.