California City council upholds $75,744 cannabis tax finding, allows 12‑month payment plan

The California City Council on April 22 upheld a tax administrator’s June 5, 2024, Notice of Violation assessing $75,744 in delinquent cannabis business tax, penalties and interest against California City Cannabis Company LLC (C4) and directed city special counsel to prepare findings and a resolution. Council also authorized a repayment schedule allowing the amount to be paid in quarterly installments not to exceed 12 months.

The council’s decision follows an appeal hearing at which C4 representatives asked the council to waive penalties and interest and allow an extended payment plan, saying the business had invested heavily in California City and did not intend to evade tax obligations. “We don’t have the revenue generation to be able to pay this in a lump sum,” appellant Eric Sanders told the council, adding C4 had invested “in excess of $2,000,000” in its facility and was continuing to pay quarterly going forward.

Why it matters: The case illustrates tensions that can arise when the city enforces a voter‑approved cannabis tax after a period of limited collection. Public commenters and some council members noted apparent earlier lapses in city enforcement and said that could justify waiving penalties. City counsel and staff maintained the notice and the calculations were proper under the municipal code, and that ignorance of the law is not a legal defense.

Special outside counsel Joaquin Vasquez opened the hearing and explained the procedural schedule the council would follow. City counsel Brandon Sanchez told the council the notice of violation was properly calculated and that penalties and interest are authorized by the city’s municipal code. Sanchez said the city had issued an NOV in June 2024 and C4 had until then had time to set aside funds. “Ignorance of the law is not a defense,” Sanchez said.

C4 lawyer Paul Spare and co‑owner Eric Sanders said the company missed earlier written notice of the quarterly tax and that, after the June notice, the city began sending quarterly reminders. The NOV’s itemized charges shown to the council were: $57,600 in base tax, $14,400 in penalties and $3,744 in interest, for a total of $75,744. Sanders told the council his firm’s first full harvests were in early 2024 and that continuations of wildfires, power delays and COVID had delayed and increased costs.

City staff, identified at the hearing as the cannabis tax administrator, said staff had limited their review to one fiscal year and did not include any additional penalties beyond those in the NOV. Staff also said C4 had been cooperative and was current on its permit and quarterly payments since receiving notice.

Several members of the public urged leniency. One public speaker argued the city had at times neglected cannabis enforcement and recommended waiving penalties and interest; another urged a payment plan to avoid forcing the business to close.

Council deliberations were split on penalty relief and repayment length. Council member Smith moved to uphold the tax administrator’s June 5, 2024 notice of violation in the amount of $75,744, to direct special counsel to prepare supporting findings and a resolution for future council approval, and to set repayment as quarterly installments not to exceed 12 months. Council member Hurls seconded the motion.

Roll call was: Council member Hurls — yes; Council member Smith — yes; Mayor Pro Tem Kulikoff — no; Mayor Hawkins — yes. Council member Hightower was absent for the record. The motion carried, and the city said it would present a resolution for the council’s consideration at a future meeting in May to memorialize the decision and payment terms.

The notice of violation and the city’s supporting correspondence are recorded as the administrative record; the council’s action directs staff and special counsel to prepare formal findings and a resolution. The council did not waive the penalties and interest as requested by the appellant, but it provided the 12‑month, quarterly payment schedule the appellant sought.

Speakers and attribution in this article are limited to those who spoke on the record at the appeal hearing, including representatives of C4, city counsel, special counsel and the cannabis tax administrator.