Let’s make it easier for the cannabis industry to pay its taxes
Cannabis — both medical and adult use — is now legal in California. That means the industry must pay its taxes and various fees. The problem is that due to our lovely federal government, which prohibits cannabis (and which is about to repeal the Affordable Care Act and defund Planned Parenthood — you get the picture), these businesses cannot bank. They can’t open an account, they can’t write a check, they can’t use a credit card, they can’t make online payments.
That means cannabis businesses have to pay their taxes and fees in cash. Yes, you read that right: In 2017 California, these businesses need to haul around suitcases of cash to pay their taxes and fees, not to mention other expenses, and may need to drive around to various state agencies with lots of cash in order to comply with the law. It’s like the wild west all over again and an invitation to crime and violence.
Nor is it easy for many cannabis industries to pay their taxes and fees, given geography. Cannabis businesses must bring the cash (possibly a large amount of cash) to only a small number of state offices, which can be hours and hours away , forcing business owners and employees to travel long distances with large amounts of cash. And, if you owe taxes and fees to multiple agencies, as many of these businesses do, you may have to drive to various offices with your suitcase of cash to pay them.
Today, I’m introducing legislation to reduce this wild west aspect of the cannabis industry, by making it much easier for cannabis businesses to pay their California state taxes and fees in cash. While we cannot overrule the federal government on its ridiculous cannabis banking ban, we can make the best of a bad situation.
The legislation does two things. First, it allows one particular state agency — the Board of Equalization — to receive cash payments for all state taxes and fees, even for other agencies. So, at the very least, you only have to bring your suitcase of cash to one state agency, which has twenty-two locations throughout the state.
Second, the legislation allows individual counties to opt in to receive cash payments from cannabis businesses on behalf of the state. The counties will then remit the payments to the state. Cannabis businesses will pay a small fee to cover the counties’ administrative costs in receiving and processing the cash. Counties won’t be forced to receive these payments. They will do so only voluntarily.
Combined, these two changes will make it much easier, safer, and more secure for cannabis businesses to pay their state taxes and fees.
(Photo: The cannabis industry is flourishing, and last summer I visited a cultivation facility in San Francisco)
The cannabis industry is a large and growing industry, projected to reach $6.5 billion by 2020. The industry may generate in excess of $1 billion in state taxes. It is in everyone’s interest to make payment of taxes and fees as easy, safe, and secure as possible, and until the federal government enters the 21st century and legalizes cannabis, California needs workarounds.
The Chair of the Board of Equalization, Fiona Ma, played a key role crafting this legislation, and Senator Toni Atkins and Assemblymember Todd Gloria are partnering with me to move it forward.
Let’s make the wild west just a bit less wild.