Senators Wiener and Atkins to Introduce Legislation to Make it Easier for Cannabis Businesses to Pay Taxes and Fees, in Collaboration with Board of Equalization Chair Fiona Ma
Sacramento – Today, Senators Scott Wiener (D-San Francisco) and Toni Atkins (D-San Diego), in collaboration with Board of Equalization Chair Fiona Ma (who is sponsoring the bill), will introduce legislation - the Cannabis Safe Payment Act - 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. Specifically, businesses will be able to make cash tax and fee payments at many more locations, including state agencies and local county tax collectors who agree to participate. Businesses will thus be able to avoid carrying large amounts of cash long distances just to comply with the law. Assemblymember Todd Gloria (D-San Diego) will be the principal co-author in the Assembly.
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 will allow the Board of Equalization to collect fees, taxes, fines, and penalties, and remit them to state agencies. It will also allow counties, with approval from the County Board of Supervisors and Tax Collector, to create a process to accept and remit payments on behalf of the Board of Equalization and other state agencies.
“California’s cannabis industry is an important part of our economy, and a growing economic sector, particularly given the voters' authorization of adult use of cannabis this past November,” said Senator Wiener. “We need to make it as easy and safe as possible for cannabis business owners to pay their taxes and fees, and we should not force them to drive hundreds of miles with a trunkful of cash just to comply with the law. In addition, with an incoming Attorney General in Washington D.C. who is hostile to cannabis, the relationship between the federal government and the cannabis industry may only get worse. While California can’t change the federal government's dysfunctional treatment of cannabis, we *can* work to ensure that our business owners here in California can easily and efficiently comply with our laws in a safe and efficient manner. We can also do our best to compensate for the federal ban on cannabis businesses accessing banking services, and the Cannabis Safe Payment Act will do just that.”
Senator Atkins stated, “California took a huge leap forward last year in creating a legal and regulatory framework for the cannabis industry. The obvious next step is to make it easier – and safer – for the business owners in this industry to participate in, and help grow, our economy. The Cannabis Safe Payment Act will do that. It’s yet another example of California leading the way for others to follow.”
The legislation is being sponsored by State Board of Equalization Chair Fiona Ma. The Board of Equalization has been collecting sales and use taxes from the cannabis industry since the passage of Prop 215 in 1996. There are twenty-two Board of Equalization office locations throughout the state, each of which has established protocols for handling large volumes of cash. Large swaths of the state, however, don't have nearby access to Board of Equalization offices.
“Driving around the State with bags of cash is not the safest method of paying your taxes, but it’s generally the only way the cannabis industry can pay what they owe until we can bank the industry,” said Chairwoman Fiona Ma, CPA. “Our priority has to be increasing safety – for the business owner, the public, law enforcement, and state employees by enabling cannabis businesses to pay their taxes and fees in as many a safe and secure locations as possible. BOE’s experience in collecting taxes is invaluable to helping state agencies that do not have a secure process or offices to collect cash payments of this size. I’m proud to sponsor this bill and thank Senator Wiener’s efforts to prioritize public safety while increasing state revenue and efficiency.”
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 recently passed 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, the Board of Equalization will be responsible for dispersing payments to these organizations on behalf of cannabis business owners. In addition, the legislation provides for counties to collect and remit payments, contingent upon approval by the County Board of Supervisors and Tax Collector..
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.
Nate Bradley, Executive Director, California Cannabis Industry Association states, "Everyday our members are forced to operate within a “cash only” reality. The inability of most cannabis businesses to access basic banking services not only poses a serious public safety risk, it also presents a myriad of other practical problems. The lack of these basic financial services is stunting the growth of the cannabis industry and causing the State of California to lose tax revenue and forego additional job creation. This bill will not solve all of these problems, but allowing the BOE to accept cash payments on behalf of other state agencies will help to reduce to the risks and ensure that the state is paid the money it is owed."
Sean Luse, Board Chair, California Cannabis Industry Association states, "Handling and transporting large amounts of cash has become an accepted reality of our industry. The all cash nature of the cannabis industry has already strained the capacity of state agencies when it comes to collecting payments. This new bill will allow the BOE to act as the cash-handling agent for the state, including all the state agencies tasked with regulating the industry. This approach will streamline the current chaos that we face while trying to pay fees and taxes to the state."