Los Angeles City Council chambers.
The Los Angeles City Council voted today to advance a tax amnesty program for licensed marijuana businesses, allowing penalties and interest to be waived in an effort to recover the roughly $400 million in unpaid taxes owed by more than 500 operators.
Councilmembers approved the directive in a 13 to 0 vote, with Councilmember Traci Park and Councilmember Hugo Soto-Martinez absent. The measure instructs city officials to draft a formal ordinance later this year that would establish the program, which would still require approval from both the council and Mayor Karen Bass before taking effect.
Councilmember Imelda Padilla, who chairs the council’s Government Operations Committee, said the initiative could help bring struggling businesses back into compliance while allowing the city to recover funds that might otherwise remain unpaid.
“There’s still work to do with the tax amnesty program,” Padilla said during the meeting. “The city finds itself with a unique opportunity to bring businesses into compliance.”
Under the proposal being developed, participating businesses would receive a full waiver of penalties and interest on their outstanding tax bills. Operators would also be allowed to enter installment payment agreements lasting up to 36 months.
City officials estimate the program could waive around $20 million in penalties while recovering approximately $30 million in unpaid taxes during its first year.
Los Angeles finance officials report that the city had 738 licensed marijuana business accounts as of October 2025. Of the more than 500 accounts currently delinquent, roughly 329 businesses owe less than $200,000 each, while 48 businesses have tax debts exceeding $2 million. A significant portion of the $400 million total consists of interest and penalties. Finance officials estimate about $35 million is accrued interest and roughly $100 million is penalties. Some of the unpaid taxes are also tied to businesses that are no longer operating but never formally closed their tax accounts.
The city’s marijuana tax structure has long drawn criticism from industry operators. Los Angeles businesses face a total tax burden exceeding 40%, including a 10% local marijuana tax.
