Denver, CO – December 3, 2025 – Greenspoon Marder secured a significant taxpayer victory before the California Department of Tax and Fee Administration (CDTFA), successfully defeating an attempted cannabis excise tax assessment against a federally compliant hemp brand. CDTFA sought to impose more than $2 million in cannabis excise tax for the period of July 2022 through April 2023 under an “unlicensed person required to be licensed” theory, which is an increasingly common position the agency has taken in cannabis-adjacent audits.
The matter began in 2023 when CDTFA opened a routine sales and use tax audit that later expanded into a cannabis excise tax audit. CDTFA ultimately asserted that the company’s products were subject to the fifteen percent California cannabis excise tax, despite the products meeting the federal definition of hemp under the 2018 Farm Bill.
Greenspoon Marder partner and co-chair of the Cannabis Law practice group, Nick Richards, along with senior counsel Matthew Schiller, Sabrina Strand, and attorney Alexis Whitley, challenged CDTFA’s position, asserting that the agency’s interpretation did not apply to the company’s federally compliant hemp products. After the firm presented its defense and supporting analysis, CDTFA reviewed the matter further and ultimately withdrew its proposed assessment.
This favorable outcome signals that similarly situated hemp companies should receive comparable treatment where products clearly fall within the federal hemp definition and outside state cannabis excise tax frameworks.
As federal and state regulations continue to shift rapidly—including California’s recent emergency actions addressing THC limits and product classification—hemp businesses face increasing scrutiny from tax authorities. Companies are encouraged to reassess their entity structures, banking relationships, product classifications, and tax exposure with qualified legal counsel.
Greenspoon Marder remains committed to helping cannabis and hemp businesses navigate evolving regulatory landscapes and defend against improper tax assessments nationwide.