Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Audit topic
No spam. Unsubscribe anytime.
Bellflower council upholds cannabis tax assessment against Medicine Woman dispensary
Summary
The Bellflower City Council voted to uphold a tax administrator’s audit finding that Medicine Woman Group LLC owes $57,284 for underreported gross receipts from 2022–2024, rejecting arguments that city cannabis tax amounts on customer receipts are exempt and that noncannabis merchandise should be excluded.
The Bellflower City Council on May 11 voted to uphold the tax administrator’s April 15, 2026 determination that Medicine Woman Group LLC owes $57,284 related to a city audit of its dispensary operations covering calendar years 2022–2024.
City audit manager Anna Guerin presented the audit findings, saying the review identified three categories of adjustments: amounts labeled as city cannabis tax collected from customers, unreported noncannabis merchandise sales, and delivery fees. The auditor later adjusted the unreported delivery‑fee amount to $4,750, leaving the contested issues about the tax‑labeled receipts and noncannabis sales. After credits and adjustments, Guerin said the outstanding amount from the audit was $57,284, including taxes, penalties, interest and audit costs.
The appellant’s counsel, Edward Pinchif, argued that amounts identified on customer receipts as the city cannabis tax should be excluded from taxable gross receipts because those amounts are required by state cannabis regulations to be shown on receipts and are collected on the city’s behalf. "This is essentially a tax on a tax," Pinchif said, urging the council to find those sums exempt under Bellflower Municipal Code exemptions for taxes required by law or amounts collected as an agent.
City Attorney (on record) countered that the city’s cannabis tax is a business privilege tax imposed on the operator, not a sales tax collected on the city’s behalf, and that the municipal code defines commercial cannabis business activity broadly. "Every person who is engaged in business as a dispensary … must pay an annual commercial cannabis tax. Period," the city attorney said in rebuttal.
Councilmembers questioned staff about auditing practice and whether other permittees itemize the local cannabis tax. Guerin said auditors reviewed four dispensaries in this audit cycle and observed differing practices: some operators “grossed up” their receipts (tax on tax) while others did not. The audit team also identified $28,175 in tax on noncannabis items, reduced by $3,753 for quarters where excise taxes already had been paid, and an additional $404 for previously unreported delivery fees.
After closing the public hearing and taking testimony from attorneys representing both sides, Councilmember Ray Dunton moved to uphold the tax administrator’s decision in full and to direct staff to proceed with authorized collection and enforcement if payment was not remitted. The motion passed unanimously on roll call.
The council’s action confirms that, under current local ordinance and the interpretation offered by the city attorney, the disputed amounts are part of taxable gross receipts for a cannabis business. The city directed staff to move forward with collection and enforcement steps consistent with the administrative determination.
What’s next: The council’s vote upheld the administrative assessment; the record indicates possible additional audits for later quarters and that staff will pursue collection if the taxpayer does not remit the assessed amount.
