This is Rob Hendrix. I am the owner of Cannabis Central of Ellensburg, a retail cannabis shop in Central Washington State. I have been open and operating, successfully and violation-free, since August 2014. I have had a wonderful relationship with the Liquor and Cannabis Board (LCB) here in the Evergreen State and recently, my good record and great relationship paid dividends.
Today, I want to share with you an issue we ran into recently that does a good job showcasing just how complicated the cannabis industry is, and how high the implications are if you make mistakes.
The Monthly Cannabis Excise Tax Remittance and Payment Procedure
My admin manager has been with me for more than three (3) years, having come to Cannabis Central via the pharmacy industry. She was a wonderful addition. Among her other duties, she is responsible for remitting our excise tax collected and sending it to the Marijuana Tax Unit of the State of Washington every month.
Usually, I prefer to send off the taxes earlier in the month although it is not due until the 20th of the month following the month completed. We have been perfect in more than 60 consecutive months insofar as handling the excise tax collected and tax remitted. It was like clockwork and I never worried about this particular aspect of managing Cannabis Central.
You can imagine my shock and horror at an email I received 12/31/2019 that indicated I was in fact late with November’s excise tax remittance. Further, I was reminded in this email that this tardiness was in fact a violation of both WAC 314-55-089 and WAC 314-55-092. I had inadvertently broken the law. Also mentioned in this email was a statement to the effect, “Please pay ASAP to avoid having to start the process of suspending your license”.
Now, in all honesty, we had paid the taxes but the WAC(s) referenced above had to do with the accompanying form that was missing. But in the eyes of the LCB and the Marijuana Tax Collection Unit, the fact we were missing the necessary form was as bad as the taxes themselves not being remitted.
How We Quickly Fixed The Issue At Cannabis Central
We jumped on the problem immediately upon receiving the alarming email. We called and emailed the Marijuana Tax Unit and also emailed, called, and texted our Enforcement Officer with the LCB as quickly as possible. In addition, we scanned and emailed all supporting documentation to the Marijuana Tax Unit and our Enforcement Officer in a show of good faith that proved the taxes themselves had been paid days prior to the December 20 deadline. After all, we were just missing the accompanying form.
My message here is simple; we reacted with an “all hands on deck” approach and attitude. We humbly approached the responsible parties to demonstrate our acceptance of the seriousness of the situation and most importantly, we took responsibility for it 100%. We did not attempt to blame others. We made no excuses and we braced for the consequences of our actions which could have included a 2% late penalty, amounting to a potential $700 fine.
We received word a day later that due in no small part to our perfect track record of excise tax remittance and the total absence of infractions and/or violations of any kind, the people in charge agreed we deserved a break. We were informed of their decision not to penalize Cannabis Central in this matter. I took this as a great compliment and I let it be known to all concerned how appreciative we all were. Whew!
What Can You Take From This Story For Your Retail Cannabis Store?
The lesson here is to be rule followers. Treat your regulatory agency and the men and women in it as partners, not as adversaries. Communicate, in fact, over-communicate with your enforcement folks. A good reputation is hard to create and it’s easy to lose. Build a great reputation, sustain it, work at it and never abuse it or over-rely upon it. Stay hungry and humble in running your business and this definitely should include your attitude towards your enforcement agency in your state.
Happy New Year to all. If you’re considering entering this still controversial and misunderstood industry, contact me, Rob Hendrix, owner, Cannabis Consulting Nationwide. We can help with state-legal retail cannabis set up, applications, vetting, build-out, hiring best practices, inventory and cash management, and most importantly, compliance. I am currently working with clients in Missouri and Illinois.