Senator Wiener’s Cannabis Safe Payment Act Passes as Part of California Budget

Included as a budget trailer bill, the Cannabis Safe Payment Act allows cannabis business owners to pay state taxes/fees at offices located throughout the state, thus avoiding need to travel long distances with suitcases of cash
June 16, 2017

Sacramento – Yesterday, the California Legislature approved the Cannabis Safe Payment Act as part of the California Budget. Senators Scott Wiener (D-San Francisco) partnered with Toni Atkins (D-San Diego) and Board of Equalization Chair Fiona Ma (who sponsored the bill) to introduce Senate Bill 148 to make it safer and simpler for cannabis business owners to pay state fees and taxes, encouraging compliance with state laws and providing support for business owners. SB 148 was incorporated into the Budget as a trailer bill and was approved by the State Legislature yesterday. 

Currently, due to federal law, cannabis businesses cannot use banking services and thus must pay taxes and fees in cash. Because the Board of Equalization, the state's tax collector, and other state agencies only have offices in certain parts of the state, cannabis business owners must travel long distances with large amounts of cash to pay state taxes and fees. This situation leads to significant safety challenges, including theft and violent crime.

The Cannabis Safe Payment Act allows the Board of Equalization to collect fees, taxes, fines, and penalties, and remit them to state agencies. The Budget trailer bill requires that such a system be put into place, and that in addition one-stop State collection office be established in the Humboldt, Mendocino, and Trinity Counties area, also known as the “Emerald Triangle” due the significance of the cannabis industry in this area. 

“Today the Legislature took a big step in helping our cannabis businesses to pay their taxes safely and efficiently, which will bring more businesses into compliance and more revenue to the State,” said Senator Wiener. “While California can’t change the restrictive and short-sighted federal policies that force the cannabis industry to operate almost exclusively in cash, we can work to bring these businesses out of the shadows and make it safer for them to operate. The Cannabis Safe Payment Act will save these business owners from having to drive all over our state with suitcases full of cash, which is a huge public safety problem. Cannabis is a significant part of our economy, and it’s only going to grow as we fully implement adult use. I’m proud to have authored the Cannabis Safe Payment Act, and I will continue to work to bring reasonable rules and regulations that support this growing industry.”  

The Medical Marijuana Regulation and Safety Act (MMRSA) passed last year by the California State legislature created a licensing and permitting framework for medical cannabis that includes payments to numerous departments. In addition, the Adult Use of Marijuana Act (AUMA) creates another path for adult use cannabis. Each of these sets parameters under which cannabis business owners will pay licensing fees, taxes, fines, and penalties. Yet, many will struggle to safely pay these taxes and fees in cash, given geographic distance.

Some of the departments that will be accepting payments from cannabis related industries under the new regulations created by MMRSA and the recently approved adult use ballot measure include the Bureau of Marijuana Control, the Department of Consumer Affairs, the Department of Fish and Wildlife, the Department of Food and Agriculture, the State Water Resources Control Board, the Department of Pesticide Regulation, the Department of Public Health, the Franchise Tax Board, and the Employment Development Department. Many of these departments only have a single location in Sacramento, or limited locations throughout the State. Under the proposed legislation, collection offices throughout the state will be responsible for dispersing payments to these organizations on behalf of cannabis business owners.

The medical cannabis industry is a $2.7 billion dollar industry, and the addition of adult use is projected to add another $1.6 billion in sales revenue in 2018. The Legislative Analyst Office estimates that new tax and license revenue could be in the high hundreds of millions of dollars to over $1 billion dollars annually. ​