California to legalize cryptocurrency for paying cannabis taxes

Lawmakers in the state of California have introduced a bill to allow cannabis-related businesses to pay fees and taxes in stablecoins. The bill was introduced by the California State Assembly on Feb. 21. Cannabis dispensaries can hold hundreds of thousands of dollars in cash at any given time. The bill is apparently an attempt to curtail the vast amounts of cash via cryptocurrency.

California lawmakers have introduced a bill proposing to allow companies that manufacture and sell marijuana to pay cannabis taxes via cryptocurrency.

Paying cannabis taxes with cryptocurrency

Bill 953, will allow the state, city and county tax authorities to accept ‘stablecoins’ from companies producing and selling marijuana to pay cannabis taxes.

As such, the law will come into force on January 1, 2020.

“The law allows the city or county to independently determine the method of obtaining stablecoins,” the bill says, “You can accept cryptocurrencies as your own digital wallet, owned by the authorities of the corresponding administrative unit, or use the services of a third-party company,”

“Such a company should immediately convert all payments made in stablecoins into US dollars and transfer them to the account of the administrative unit.”

The difficulties with cannabis businesses

Firstly, let us remind you that marijuana has recently been legalized in several U.S. states.

However, companies associated with this business are facing difficulties in obtaining financial services from banks.

Firstly, most banks operate under the regulation of the Federal Deposit Insurance Corporation (FDIC). Consequently, it prohibits financial institutions to deal with cannabis companies.

Nevertheless, marijuana producers and sellers accumulate huge amounts of cash and taxes are often paid in cash. As a result, the tax authorities have to deal with a lot of cash.

Furthermore, this results in companies sometimes having to travel up to 500 kilometres to the tax office. Thanks to the use of stablecoins, the collection, and processing of taxes will be easier for both the tax authorities and companies.

Instead of carrying around cash, they can handle cannabis taxes all the easier.

Ohio sets the trend on using cryptocurrency for cannabis taxes

It should be noted that the American state of Ohio became a pioneer in collecting taxes with the help of cryptocurrencies.

Back in late November, commercial organizations of the state were able to pay their taxes with the help of cryptocurrencies. Moreover, the New Hampshire state authorities also thought about such a possibility.

Further, the bill is apparently an attempt to curtail the vast amounts of cash that end up in state tax offices and need to be processed.

California State Treasurer, Fiona Ma, recently testified before the U.S. House Committee on Financial Services regarding the tax collection process for cannabis businesses.

“Duffel bags and sometimes suitcases of cash would arrive quarterly at some of our designated offices and some business owners had to drive 350 miles to pay their taxes,” she stated.

The Dash network hopes to aid cannabis payments

In 2017, the Dash network began implementing Dash as a payment option in the cannabis industry’s point of sale devices.

In doing so, Dash reportedly aimed to save the industry 10-15%. As such, the decreased flow of paper money will stymie the need for cash boxes, safes, and guards.

Other U.S. states have also introduced bills that would allow cannabis taxes to be paid in cryptocurrency.

In conclusion, legislators in the U.S. state of New Hampshire proposed a bill to accept Bitcoin for state payments.

“This bill requires the State Treasurer to develop an implementation plan for the state to accept cryptocurrencies as payment for taxes and fees beginning July 1, 2020,” the document reads.

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(Featured image by Artem Beliaikin via Unsplash)

First published in BitNovosti, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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