The Press Democrat reports
Code enforcement officers have ordered Eddie Alvarez to close The Hook after learning his state permit to operate the retail business was revoked after records showed he owed as much as $380,000
Santa Rosa City Council member Eddie Alvarez is racking up daily fines of $500 and faces potential legal sanctions for defying a city order issued in mid-March to close his cannabis dispensary.
Code enforcement officers served a cease-and-desist order on his Russell Avenue business, The Hook, March 15 after learning he didn’t have a valid state permit to operate retail businesses.
It’s unclear when the permit was revoked, but the issue appears to stem from at least $380,000 owed in state business taxes.
This is the first time the city has taken steps to close a dispensary, officials said.
To date, Alvarez’s city citations amount to more than $9,000, according to city records.
The California Department of Tax and Fee Administration notified the city in February that it sought to seize Alvarez’s property to recover unpaid taxes.
Alvarez’s tax woes were well known inside City Hall, according to city officials, but the notice kicked off an internal code complaint. An investigation found his business was in violation of several city codes for failing to pay state taxes and not having the proper business permits, according to city employees and copies of the case file and closure order.
Alvarez, who was first elected in 2020, said Tuesday he has been working with state tax authorities to pay down his balance and reinstate his seller’s permit and was surprised by the city’s action. The city didn’t give him a grace period to remedy the issue before ordering him to close, he said.
“I find it very unjust that I’m having positive talks with the state agency and now I’m having my own city saying I can’t operate,” he said. “It’s very frustrating.”
Santa Rosa Cease and Desist.pdf
Alvarez said he can’t afford to shutter the business, so he has remained open despite the accumulating fines.
He said his case shows how the regulatory hurdles and tax liabilities dispensaries face make it hard for smaller operations like his to operate.
The case is emblematic of the financial struggles faced by cannabis operators across California as they grapple with hefty tax burdens, according to industry experts.
The state tax agency, working with California Highway Patrol and local licensing authorities, has conducted more than 1,000 inspections of cannabis retailers, distributors and growing operations since 2020 and seized more than $32 million in cash and products, according to a June story in the trade publication Marijuana Business Daily.
It was not immediately clear how many of those retailers had been forced to close by the state or municipalities.
The city crackdown isn’t the first time Alvarez’s dispensary has faced scrutiny over unpaid taxes.
CHP officers and state tax officials in June 2022 confiscated more than $200,000 in cash from the business to cover unpaid taxes. Alvarez said at the time he hadn’t paid state taxes since opening The Hook in northwest Santa Rosa in 2019.
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