Attorney General Jeff Sessions Takes On The Marijuana Industry

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Attorney General Jeff Sessions Takes On The Marijuana Industry

On January 4, 2018, U.S. Attorney General Jeff Sessions announced the revocation of what is known in the cannabis industry as the “Cole Memo”.

It is surprising that the Trump Administration known for its pro-business stance, allowed for such an anti-business decision to be made by Attorney General Jeff Sessions.  Just in California alone with the change in law allowing both medical and recreational marijuana, the marijuana industry in California is expected to be a $3.7 billion market in 2018 and could rise to $5.1 billion in 2019 according to the cannabis industry research firm BDS Analytics.

Medical marijuana is now legal in 29 states plus the District Of Columbia and recreational marijuana is legal in 8 states plus the District Of Columbia.  However, under Federal law marijuana is designated as a Schedule I controlled substance and therefore is illegal under Federal law.

The Cole Memo which came out of the Department Of Justice (“DOJ”) under the Obama administration in 2013, directed U.S. Attorneys to use discretion to prioritize certain types of violations in prosecuting cannabis operators, but, strictly speaking, it did not make operations in cannabis legal. The DOJ told its prosecutors that prosecuting medical marijuana cases in states where is has been legalized would no longer be a priority.

The Cole Memo included eight factors for prosecutors to look at in deciding whether to charge a medical marijuana business with violating the Federal law:

  • Does the business allow minors to gain access to marijuana?
  • Is revenue from the business funding criminal activities or gangs?
  • Is the marijuana being diverted to other states?
  • Is the legitimate medical marijuana business being used as a cover or pretext for the traffic of other drugs or other criminal enterprises?
  • Are violence or firearms being used in the cultivation and distribution of marijuana?
  • Does the business contribute to drugged driving or other adverse public health issues?
  • Is marijuana being grown on public lands or in a way that jeopardizes the environment or public safety?
  • Is marijuana being used on federal property?

Under Sessions’ new guidance, the Cole Memo is overridden and U.S. Attorneys now retain broad prosecutorial discretion as to whether to prosecute cannabis businesses under federal law even though the state that these businesses operate in have legalized some form of marijuana.  Although the safe harbor guidelines are no longer in place at a national level, that does not mean that your local federal prosecutor will disregard their continued application in determining whether federal prosecution against a local marijuana business should be implemented.  But this is no guarantee so it is essential that you have legal counsel to back you up.

What Should You Do?

Given the greater disparity in treatment between the Federal and California governments you need to protect yourself and your marijuana business from all challenges created by the Federal government.  Be proactive and engage an experienced attorney-CPA in your area.  Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County, Long Beach and other California locations protect you and maximize your net profits.

 

Beware Of New Invoicing Rules And Taxes Starting In 2018 For California Cannabis Businesses

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The California Department of Tax and Fee Administration (CDTFA) which oversees the reporting and collection of taxes for the California cannabis industry under Emergency Regulation 3700 is proposing a new category and tax rate for the cannabis cultivation tax which will take effect January 1, 2018, along with the other existing cultivation tax rates.

Cannabis Cultivation Tax

The new category and tax rate for the cannabis cultivation tax as approved by California voters on November 8, 2016 (Proposition 64), established a cultivation tax based on the dry-weight ounce of cannabis flowers and leaves. The CDTFA has proposed a new cannabis cultivation tax category for fresh cannabis plants at a rate of $1.29 per ounce.

The cultivation tax rates are:

•$9.25 per dry-weight ounce of cannabis flowers,

•$2.75 per dry-weight ounce of cannabis leaves, and

•$1.29 per ounce of fresh cannabis plant.

All fresh cannabis plants must be weighed within two hours of harvesting.

The excise tax applies to all retail sales of cannabis and cannabis products starting January 1, 2018 including sales of cannabis and cannabis products retailers may have purchased prior to January 1, 2018.

If you are a cannabis retailer, you are required to collect the cannabis excise tax from your customers on each retail sale of cannabis or cannabis products starting January 1, 2018, and pay the excise tax to a distributor. Distributors are liable for paying the cannabis taxes to the CDTFA.

Invoice Requirements

Retailers are required to provide purchasers with a receipt or other similar document that includes the following statement – “The cannabis excise taxes are included in the total amount of this invoice.”

Recordkeeping

Every sale or transport of cannabis or cannabis products must be recorded on an invoice or receipt. Cannabis licensees are required to keep invoices for a minimum of seven years.

Distributors (or in some cases manufacturers) are responsible for collecting the cannabis cultivation and excise taxes, and the invoices they provide must include, among other specified requirements, the amount of tax collected.

Retailers, cultivators, and manufacturers must keep these invoices as verification that the appropriate tax was paid.

What Should You Do?

Start your marijuana business on the right track.  Be proactive and implement the proper cash management and accounting systems now.  Marijuana businesses who hire an experienced attorney-CPA should benefit in paying the least amount of tax under the tax code and if audited, the least audit adjustments and avoiding costly litigation. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Walnut Creek and other California locations maximize your net profits and get you the best possible result.

Marijuana Businesses Substantiate To IRS Expenses Paid In Cash Are Your Cash expenses tax deductible?

How Do Marijuana Businesses Substantiate To IRS Expenses Paid In Cash?

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It is outrageous that the $6.7 billion U.S. cannabis industry is forced by disparities in state and federal law to conduct nearly all transactions in cash.  Experts believe that by 2021 the cannabis industry is expected to balloon to $21 billion.  The lack of banking opportunities for marijuana business and being forced to deal in cash creates challenges for these business to not only manage the cash but how to substantiate expenses paid in the event the business is select for audit by the IRS.

Yes – Marijuana Businesses Have to Report Income To IRS And Pay Taxes!

Legal marijuana businesses have to pay taxes under I.R.C. §280E, the same category reserved for illegal drug traffickers. Cannabis is categorized as a Schedule I substance under the Controlled Substances Act. While more than half of the states in the U.S. have legalized some form of medicinal marijuana, and several others have passed laws permitting recreational cannabis use, under federal drug laws the sale of cannabis remains illegal.

Supporting Business Documents

In any typical business, purchases, sales, payroll, and other transactions will generate supporting documents. Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. These documents contain the information you need to record in your books. It is important to keep these documents because they support the entries in your books and on your tax return. Keeping them in an orderly fashion and in a safe place will assure that if the time should come that you are selected for an IRS audit, you will be able to produce them and preserve the deductions claims.

Proof of Payments

Proving deductions to the IRS is a two-step process:

First, you must substantiate that you actually paid the expense you are claiming.

Second, you must prove that an expense is actually tax deductible.

So what do you do when your marijuana business operates in a cash environment without using any bank accounts?

Step One: Incurred And Paid The Expense

For example, if you claim a $5,000.00purchase expense from a marijuana distributor, offering a copy of a bill or an invoice from the distributor (if one is even provided) is not enough. It only proves that you owe the money, not that you actually made good on paying the bill. The IRS accepts canceled checks, bank statements and credit card statements as proof of payment. But when such bills are paid in cash as it typical in a marijuana business, you would not have any of these supporting documents but the IRS may accept the equivalent in electronic form.

That is where it becomes essential that an accounting system be developedearly on to track these transactions.

Step Two: Deductibility Of The Expense

Next you must prove that an expense is actually tax deductible. For marijuana businesses this is challenging because I.R.C. §280E states: “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedules I and II of the Controlled Substances Act, 21 U.S.C §812) which is prohibited by federal law or the law of any state in which such trade or business is conducted.”

In reading I.R.C. §280E one would think that no deductions are allowed in a marijuana-related business but if that were the case, the U.S. Tax Court has stated that this statute would have been stricken as unconstitutional as the Sixteenth Amendment to the U.S. Constitution prohibits the Federal government from taxing “gross receipts”. Reading vs. Commissioner Of Internal Revenue, 70 T.C. 730 (1978). So the way I.R.C. §280E operates is to allow marijuana-related businesses to deduct Costs Of Good Sold but not “ordinary and necessary” business expenses. This tax treatment prevails regardless that you are conducting a marijuana business that is duly licensed in a State that has legalized marijuana because such business is still illegal under federal law.

It should be apparent that the cost of acquiring the marijuana itself is part of Costs Of Good Sold but what if you produce the marijuana? We advocate that producers can also capitalize the direct material costs (marijuana seeds or plants), direct labor costs (planting, cultivating, harvesting and sorting), and certain indirect costs that include repairs, maintenance, utilities, rent, taxes, depreciation, employee benefits and officer’s salaries). Resellers too should consider a more expansive view of Cost Of Goods Sold that includes capitalizing the costs of transportation and other necessary charges incurred in acquiring possession of the marijuana and maintaining the inventory for resale.

That is why it becomes essential that a proper accounting system be developed to capitalize as much of your expenses into inventory in a manner acceptable by the IRS.

Getting The Money To IRS And State Tax Agencies

This same lack of access to a traditional banking infrastructure making it difficult for cannabis companies to establish exactly the kind of fiscal paper trail that the IRS and state tax agencies could use to help enforce tax compliance also creates a problem as to how to pay the taxes due to IRS and state tax agencies.  Keep in mind that this problem is just not a once a year event, it goes on all year – you have to remit your payroll taxes quarterly, your excise taxes are collected monthly. With all the cash to keep track of, the record keeping involved and the security of string and transporting funds, it is crucial that a proper cash management and accounting system be established and maintained.

What Should You Do?

Don’t wait to be selected for an IRS audit.  Be proactive and implement the proper cash management and accounting systems now.  Marijuana businesses who hire an experienced attorney-CPA should benefit in paying the least amount of tax under the tax code and if audited, the least audit adjustments and avoiding costly litigation. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County, San Jose and other California locations maximize your net profits and get you the best possible result.

City Of Long Beach Rings In 2018 Opening Its Gates To Medical Marijuana Businesses

City Of Long Beach Rings In 2018 Opening Its Gates To Medical Marijuana Businesses

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Long Beach Municipal Code Chapter 5.90 – On November 8, 2016, the citizens of Long Beach voted to approve the regulatory portion of Measure MM, making it legal to own and operate a medical marijuana business in the City of Long Beach. The ordinance allows for medical marijuana dispensaries, delivery, manufacturing, cultivation, distribution, and laboratory testing. The newly added Long Beach Municipal Code (LBMC) Chapter 5.90 requires medical marijuana businesses to be licensed by the State following the State issuing licenses beginning in January 2018.

Marijuana Business Licenses

On November 8, 2016, California voters approved Proposition 64, the Adult Use of Marijuana Act (AUMA). AUMA created a statewide regulatory and licensing system for adult-use marijuana businesses. On June 27, 2017, Governor Jerry Brown signed into law the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which merged regulations for medical and adult-use cannabis into a single regulatory framework. MAUCRSA grants local governments the ability to regulate and/or prohibit commercial marijuana activity within their jurisdictions. The State of California will issue temporary marijuana licenses beginning January 1, 2018 pursuant to Business and Professions Code Section 26050.1. In order to apply for a State temporary license, Applicants must provide evidence of a valid license, permit, or other local authorization.

The Business License Division within the Department of Financial Management is the licensing authority for all medical marijuana businesses in the City of Long Beach. Long Beach will accept applications only for medical marijuana businesses. Currently, Long Beach is not issuing licenses for recreational marijuana businesses. Long Beach will shut down and prosecute any marijuana business located in the City of Long Beach that does not have the required licenses.

Available Medical Marijuana Business Licenses in Long Beach

Five types of medical marijuana business licenses will be issued in the City of Long Beach:

Medical Marijuana Dispensary

Medical Marijuana Cultivation Facility

Medical Marijuana Manufacturing Facility

Medical Marijuana Distribution Facility

Medical Marijuana Testing Laboratory

Status Of Businesses Providing Adult-Use (Recreational) Marijuana in Long Beach

On November 14, 2017, the Long Beach City Council voted to request the City Manager to work with affected City Departments to develop recommendations to legalize and regulate commercial adult-use (recreational) marijuana businesses in Long Beach. The City Attorney will report back to City Council with a draft ordinance to allow, license, and regulate the retail sale, cultivation, manufacture, distribution, and laboratory testing of adult-use marijuana in Long Beach by June 2018.  In the meantime starting November 14, 2017, a temporary ban is in effect for the next 180 days, prohibiting the operation of any commercial adult-use marijuana activities in Long Beach. This ban does not apply to medical marijuana business licenses.

Procedure For Licensure

The State of California will issue temporary marijuana licenses beginning January 1, 2018. In order to apply for a State temporary license, Applicants must provide evidence of a valid license, permit, or other local authorization. The City of Long Beach will issue a letter of local authorization for an applicant to obtain the temporary State license if the proposed medical marijuana business has completed the following tasks:

  1. The Applicant has submitted the Medical Marijuana Business License Application, Operating Plan, Supplemental Information, and applicable fees to the City of Long Beach and such application has been determined by the City Manager or his or her designee to be complete;
  2. The City’s Planning Bureau has conducted a review of the proposed business location and has deemed the application to be in compliance with all applicable buffer distance requirements as set forth in LBMC Section 5.90.030 and Section 5.90.060, as applicable;
  3. The Applicant has submitted all required plans for plan check approval for review by the Department of Development Services and had such plans approved;
  4. The Applicant has been issued a valid building permit for the approved marijuana use at the proposed business location by the Department of Development Services; and
  5. The Applicant has paid all applicable business license taxes and fees.

The letter of local authorization does not grant a business the right to operate in Long Beach. The letter of local authorization is exclusively intended to assist marijuana businesses in initiating an application for a temporary license with the State to obtain the license in a timely manner. Upon receiving the State temporary license, a medical marijuana business can start operating in Long Beach beginning January 1, 2018 provided that the businesshas been issued all necessary and valid local permits for the proposed business location and the City has issued a valid City of Long Beach Medical Marijuana Business License.

Acceptable LocationsIn Long Beach For Medical Marijuana Businesses

Proposed medical marijuana facility locations must comply with the restrictions laid out in LBMC Section 5.90.030:

  1. No Medical Marijuana Business may be operated in an area zoned exclusively for residential use
  2. No Medical Marijuana Business may be located within one thousand (1,000) foot radius of a public or private school (as defined in Health and Safety Code 11362.7689(h));
  3. No Medical Marijuana Business may be located within one thousand (1,000) foot radius of a public beach;
  4. No Medical Marijuana Business may be located within a six hundred (600) foot radius of a public park or public library;
  5. No Medical Marijuana Business may be located within a six hundred (600) foot radius of a day care center (applications submitted before January 1, 2018 are exempt from this requirement); and
  6. No Medical Marijuana Dispensary may be located within one thousand (1,000) foot radius of another Medical Marijuana Dispensary.

What Should You Do?

Whether starting a new marijuana business or acquiring/selling an existing marijuana business, be proactive knowing that you have hired tax counsel to implement the proper cash management and accounting systems now.  Marijuana businesses who hire an experienced attorney-CPA should benefit in paying the least amount of tax under the tax code and if audited, the least audit adjustments and avoiding costly litigation. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County, Long Beach and other California locations maximize your net profits and get you the best possible result.

Tax Planning For Marijuana Businesses

Tax Planning For Marijuana Businesses

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Medical marijuana is now legal in 29 states plus the District Of Columbia and recreational marijuana is legal in 8 states plus the District Of Columbia. In 2000, 70% of Americans believed marijuana should be illegal. Attitudes have since dramatically changed with a complete flip as a 2017 Yahoo News/Marist Poll survey showed that 83% support legalization. Despite this huge turn in public opinion and about 60% of the U.S. population are living in states that have legalized marijuana, marijuana is still designated as a Schedule I controlled substance and therefore is still illegal under Federal law.

Illegal Income Is Still Taxable Income

I.R.C. §61(a) essentially states: “Gross income means all income from whatever source derived”. There is no distinction between legal and illegal income – meaning that if it is income, it is taxable. This concept was affirmed in a U.S. Supreme Court case, James vs. United States, 366 U.S. 213 (1961), where the Court stated that “gains are no less taxable because they have been acquired by illegal methods”.

Deductions Against Illegal Income Are Limited.

I.R.C. §280E states: “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedules I and II of the Controlled Substances Act, 21 U.S.C §812) which is prohibited by federal law or the law of any state in which such trade or business is conducted.”

In reading I.R.C. §280E one would think that no deductions are allowed in a marijuana-related business but if that were the case, the U.S. Tax Court has stated that this statute would have been stricken as unconstitutional as the Sixteenth Amendment to the U.S. Constitution prohibits the Federal government from taxing “gross receipts”. Reading vs. Commissioner Of Internal Revenue, 70 T.C. 730 (1978). So the way I.R.C. §280E operates is to allow marijuana-related businesses to deduct Costs Of Good Sold but not “ordinary and necessary” business expenses. This tax treatment prevails regardless that you are conducting a marijuana business that is duly licensed in a State that has legalized marijuana because such business is still illegal under federal law.

It should be apparent that the cost of acquiring the marijuana itself is part of Costs Of Good Sold but what if you produce the marijuana? We advocate that producers can also capitalize the direct material costs (marijuana seeds or plants), direct labor costs (planting, cultivating, harvesting and sorting), and certain indirect costs that include repairs, maintenance, utilities, rent, taxes, depreciation, employee benefits and officer’s salaries). Resellers too should consider a more expansive view of Cost Of Goods Sold that includes capitalizing the costs of transportation and other necessary charges incurred in acquiring possession of the marijuana and maintaining the inventory for resale.

To illustrate the potential tax savings, check out this example of a marijuana-related business with monthly gross receipts of $100,000 ($1,200,000 annually):

With No Tax Planning

With Tax Planning
Gross receipts

$1,200,000

$1,200,000
Cost Of Goods Sold

-0-

$780,000
Gross Profit

$1,200,000

$420,000
Taxes at 35% on Gross Profit

$420,000

$147,000
Ordinary And Necessary Business Expenses

$900,000

$120,000
Your Net Profit <Loss>

<$120,000>

$153,000

You can see how important it is that the business be able to capitalize as much of these expenses into inventory to show a higher Cost Of Goods Sold and hence lower taxes which equates to higher profits.

What Should You Do?

So until the tax code is changed so that marijuana is not subject to the restrictions of I.R.C. §280E, it is important that anyone in the marijuana business seek tax counsel knowledgeable with the strategies associated with I.R.C. §280E and what accounting systems must be in place to legally show the lowest amount of net taxable income as possible. Let the tax attorneys at the Law Offices Of Jeffrey B. Kahn P.C. located in Orange County, San Diego County and other locations in California help you meet your challenges minimizing your taxes and conduct business in a manner that avoids prosecution by the Federal authorities and meets California laws and regulations.

Marijuana-Business-Facing-IRS-Audit

Are You A Marijuana Business Owner With Incomplete Books And Records Facing An IRS Audit?

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It is common that marijuana businesses operating in States that have legalized marijuana for medical and/or recreational use (Medical marijuana is now legal in 29 states plus the District Of Columbia and recreational marijuana is legal in 8 states plus the District Of Columbia) deal in cash and do not maintain accounting systems that are ordinarily established with other businesses. So if your marijuana-related business is selected by the IRS for an audit, do not be so willing to concede disallowance all of your Cost Of Goods Sold expenses due to lack of documentation. Here is a case of a marijuana business owner who prevailed on this issue despite his lack of sufficient receipts and records.

The Olive Case

In 2012 the Tax Court ruled on the case of, Martin Olive vs. Commissioner, 139 T.C. 19 (2012). Mr. Olive established the Vapor Room in San Francisco, California selling medical marijuana which at the time and through the present is legal in California. Mr. Olive was selected for audit by the IRS who asserted that Mr. Olive (1) understated the income of the Vapor Room, (2) overstated the Cost Of Goods Sold, and (3) was not entitled to any operating expenses under I.R.C. §280E. Mr. Olive acknowledged that he did not maintain an adequate system of maintaining books and records. So regarding issue (1), the IRS prevailed with their calculation of gross income. As to issue (3), the IRS prevailed as IRC Section 280E which applies to marijuana-related businesses regardless of such businesses operating in a State where it is legal, that the business is not allowed to deduct operating expenses. So that then leaves issue (2) which is where the Tax Court refused to side with the IRS that Mr. Olive was not entitled to deduct any Cost Of Goods Sold.

Tax Code Requires Substantiation Of Expenses

In the context of businesses that conduct lawful activity, taxpayers bear the burden of proving that claimed business expenses were actually incurred and were “ordinary and necessary”. I.R.C. §162(a). A taxpayer is required to maintain sufficient permanent records to substantiate his business deductions. IRC §6001; Briggs v. Commissioner, T.C. Memo. 2000-380; Income Tax Regs. §1.6001-1(a), (d).

But since marijuana businesses are still illegal under Federal law, taxpayers cannot claim “ordinary and necessary” business expenses pursuant to I.R.C. §280E. This code section states: “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedules I and II of the Controlled Substances Act, 21 U.S.C §812) which is prohibited by federal law or the law of any state in which such trade or business is conducted.”

In reading I.R.C. §280E one would think that no deductions are allowed in a marijuana-related business but if that were the case, the U.S. Tax Court has stated that this statute would have been stricken as unconstitutional as the Sixteenth Amendment to the U.S. Constitution prohibits the Federal government from taxing “gross receipts”. Reading vs. Commissioner Of Internal Revenue, 70 T.C. 730 (1978). So the way I.R.C. §280E operates is to allow marijuana-related businesses to deduct Costs Of Good Sold but not “ordinary and necessary” business expenses. This tax treatment prevails regardless that you are conducting a marijuana business that is duly licensed in a State that has legalized marijuana because such business is still illegal under federal law.

But Unsubstantiated Expenses May Still Be Recognized Under The Cohan Rule

If a taxpayer with inadequate business records proves that he incurred certain expenses but cannot substantiate the exact amount, the Court in appropriate circumstances may estimate the amount allowable. George M. Cohan v. Commissioner Of Internal Revenue, 39 F.2d 540, 542-544 (2nd Cir. 1930). Under this so called “Cohan Rule”, the Court “bears heavily…upon the taxpayer whose inexactitude is of his own making.” This means that the taxpayer must provide some reasonable evidentiary basis for the estimate. The Tax Court should then only allow you to deduct the least amount of money that you could have possibly spent. Although this may not be the entire sum you are claiming, it is better to get something than nothing when you do not have the receipts to back up your expenses.

So Back To Mr. Olive’s Case

By applying the Cohan Rule, the Tax Court through the taxpayer’s testimony (or other credible testimony) establishing a reasonable evidentiary basis for estimated Cost Of Goods Sold expenses, can find for the taxpayer deductions which ordinarily would be denied by IRS. A Marijuana industry leader testified at trial that on average, the cost of goods sold of medicinal marijuana facilities were approximately 75.16% of revenue. The Tax Court used this figure applied to the gross revenues that it deemed correct by the IRS’ audit. At trial Mr. Olive testified that he sold to the patrons for cash 93.5% of the marijuana that he received and he gave the rest to patrons (including himself and the other staff members) for free. So the Tax Court then reduced Mr. Olive’s Cost Of Goods Sold by 6.5% to account for the fact that he gave away some of his product for free. The court rightfully justified this reduction on the reasoning that because he gave it away, it wasn’t held for sale and thus couldn’t be included in Cost Of Goods Sold.

The lesson to learn from this is that a taxpayer who maintains adequate books and records should be more successful in asserting his claimed expenses in an IRS audit than one who disregards record keeping.

What Should You Do?

For those marijuana-related businesses that fail to maintain adequate records or whose records got lost or damaged, all hope is still not lost in surviving an IRS audit. Taxpayers who hire an experienced tax attorney in audits and tax appeals who at the earliest opportunity introduces and applies the Cohan Rule should result in the least possible audit adjustments and avoiding costly litigation. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County, San Jose and other California locations get you the best possible result.