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California cities, counties cut marijuana taxes to aid struggling companies

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An increasing number of county and local elected officials across California are acknowledging a longtime cannabis industry grievance – legal companies’ taxes are too high – and cutting local levies on retail sales, business operations or both.

At least 14 cities and counties in the state – including key consumer markets such as Los Angeles and San Francisco as well as less-populated, production-focused areas like Calaveras and Humboldt counties – have reduced or eliminated local sales, business or cultivation taxes over the past year, according to research compiled by Hirsh Jain of Ananda Strategy, a Los Angeles-based consultancy.

The trend reflects a growing acceptance among elected officials that legal marijuana in the state’s roughly $6 billion market is simply too expensive for California consumers who can patronize a still-thriving illicit market that regulators and law enforcement have been unable to punish out of existence.

Cannabis sales in California are subject to a 15% state excise tax as well as state sales taxes, which range from 7.25% to as high as 10.75% in some areas.

That’s on top of any local taxes that cities and counties might choose to impose.

The tax cuts are welcome but limited relief for a struggling industry desperate to stay afloat amid familiar pressures.

Advocates say the collapse this summer of Herbl, a major distributor alleged to have left a string of unpaid invoices across the state, is a sign of things to come unless major changes are made.

The tax cuts reflect a stark departure from the attitude in legalization’s early days, when local governments saw marijuana industry tax revenue as a new source of revenue to backfill budgets and avoid more difficult conversations around spending priorities.

But it’s also a demonstration that the help legal businesses say they need is more likely to come in the short to medium term from local lawmakers than at the state level.

“These local jurisdictions arguably need the revenue more than the state does,” Jain told MJBizDaily. “These cities are making practical decisions to preserve a struggling industry.

“That’s why it’s all the more disappointing the state’s not getting the memo.”

Cuts across the state

Among the cities that have cut taxes in the past year are:

  • Berkeley, where lawmakers voted in July to extend an across-the-board local tax exemption until 2025.
  • Cathedral City, which cut a retail tax from 10% to 5% and offered further cuts on cultivation and other business taxes.
  • Long Beach, which cut local taxes for social equity businesses and is offering further benefits for small companies that meet certain so-called “good employer” requirements.
  • Palm Desert, which cut a gross receipts tax on retailers from 10% to 5%.
  • San Francisco, which delayed imposing a local tax rate entirely.
  • Santa Ana, which cut taxes across the board.

Counties with recent cuts include:

  • Calaveras.
  • Humboldt.
  • Mendocino.
  • Monterey.
  • San Luis Obispo.
  • Sonoma.

‘Help people who are following the rules’

Upscale wineries and sprawling farms dot the hills in San Luis Obispo County on California’s Central Coast, a popular weekend-getaway destination where cannabis companies have struggled to find a solid foothold.

Part of the reason is that retail operations are banned in unincorporated areas of the county, which has been a “very arduous place for the cannabis industry to do business,” admitted county Supervisor Dawn Ortiz-Legg, who was elected in June 2022.

Another reason is a 2018 voter-approved law that imposed a gross-receipts tax on cannabis businesses that was scheduled to increase from 8% to 10% on July 1 – unless the county Board of Supervisors intervened.

Recognizing that cannabis is a “fledging” industry – which, as Ortiz-Legg described it, is “somewhat in freefall” – the board voted in late June to cut the gross-receipts tax on cannabis businesses to 6% instead.

“All industries when they first start out are on rocky roads at first,” she told MJBizDaily.

“I think it’s our responsibility to help people who are following the rules and paying bills. Instead of being penalized, they should be supported and helped.”

Ortiz-Legg said she pushed to cut taxes further, to as low as 4%.

“In my opinion, we really need to be helping them a lot more than we have,” she added.

“The harder we make it for legal participants, the easier we make for the (illicit) market.”

Taxes ‘one piece’ of the puzzle

Economists stress that high taxes are only one pressure point for legal marijuana businesses in the state, where much of Proposition 64 – the 2016 voter-approved legalization law – can be changed only at the ballot box.

For example, industry observers have long lamented how little retail capacity there is in a state as large as California, which encourages consumers to patronize illicit-market options – including illegal delivery services and stores.

A representative of the League of California Cities, or CalCities, one of the major statewide lobbies involved in crafting Prop 64, said the organization had no comment.

The influence of CalCities, observers say, helped enshrine the “doctrine” of local control in state law, meaning cities and counties can strictly zone or ban cannabis retail entirely.

However, even CalCities’ guide for local lawmakers on how to regulate cannabis warns against taxing marijuana too heavily.

“(T)he key is to strike a balance so that taxes are not so high that they deter operators from doing business legitimately and encourage them to continue in the illegal market.”

And skeptics point out that other states – chief among them Washington with its 37% effective tax rate when state and local levies are tallied – also have high taxes but don’t suffer the same problem as legal businesses in California.

In the Golden State, stiff regulations – including environmental-protection laws as well as a licensing process that can leave would-be growers or sellers paying expensive commercial rents for months or even years without any revenue coming in – are also “a really big deal for legal cannabis,” said Daniel Sumner, a distinguished professor at the University of California, Davis, where he chairs the school’s Cannabis Economics Group.

“It’s not like starting a dog-walking business.”

“People tend to emphasize taxes because it’s an easy thing. ‘Oh, reduce taxes from 15% to 10%,’” said Robin Goldstein, the UC Davis Cannabis Economics Group’s director, who with Sumner co-wrote a book-length study, “Can Legal Weed Win? The Blunt Realities of Cannabis Economics,” published last summer.

“But when you put all the taxes together, that’s one small piece of what’s making it hard for legal weed to compete with illegal weed,” he said.

Still, doing away with local taxes “is visible and easy,” Sumner added.

“And the biggest thing about cutting taxes is that it does show, to some degree, that local jurisdictions sort of get it.”

‘Regulate cannabis like kale’

Ultimately, Goldstein argues, if policymakers want legal marijuana to be successful, they would do well to follow models from other stable and profitable industries.

“One thing we talk about is regulating cannabis like kale,” he said.

“If you want your county or your city to have the best benefit of reaping benefits in terms of jobs, regulate the industry like you do other prosperous sectors of the economy – which is to say like a normal agricultural product.

“The idea that you have to set up a special system for cannabis, with special stores that can sell nothing else, on top of all this other stuff you’re piling on top of it, is really not learning from the lessons of what’s succeeded in other industries.”

Source: https://mjbizdaily.com/california-cities-counties-cut-cannabis-taxes/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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