State begins to tackle cash-handling issue now that recreational pot is legal in California
The passage of Proposition 64 gives urgency to the need to find a system for handling the hundreds of millions of dollars now generated in cash by the marijuana industry in California, according to Fiona Ma, chairwoman of the state Board of Equalization.
The issue arises because federally regulated banks will not accept drug proceeds, so pot shops can't write bank checks or use credit cards to pay fees and taxes to the state.
In addition to pot shops having difficulty handling their deposits, the state faces a difficult situation accepting up to $1 billion in annual taxes in cash.
“We are going to have to figure out the cash issue and how we are going to accept the cash.” Ma said. “We are working on different options right now to try to alleviate the cash problem.
One idea is to have a tax official stationed at branches of Bank of America, which handles tax proceeds for the state, so the official can accept cash payment of taxes and then deposit it as state revenue. Ma said she was also looking at possibly having Department of Motor Vehicles locations accept tax payments in cash.
The issue also affects other state agencies, such as the Department of Consumer Affairs, that are not set up to accept cash payments for license fees that would be paid by those getting state permits to grow, transport and sell marijuana.
Ma said her agency would probably try again to get legislation approved to allow her office to accept cash for other agencies’ license fees. “If you want to get a state permit from a state agency, the state agencies are not equipped to take cash payments,” she said.
There is one benefit under the measure for current holders of medical marijuana cards. Proposition 64 exempts them from state sales taxes.