California Bill Proposes Use of Crypto To Pay For Cannabis Taxes
California lawmakers have drafted a bill seeking to make it legal for cannabis-related businesses to pay state taxes in cryptocurrency. In the proposed bill, lawmakers want the state to allow businesses that deal in cannabis in California to pay their taxes in USD-backed stablecoins. If the state passes the bill, then the new tax payment option for the marijuana industry will become law and take effect beginning January 2020.
According to proponents of the draft law, the aim is to help the industry resolve the challenge of complying with taxation requirements. Marijuana for medical reasons is legal in 33 states in the U.S. and in 10 states for recreational purposes, a factor that has seen the industry post increased revenues throughout 2018.
The legalization of marijuana in so many states has even seen the likes of IBM consider having cannabis tokenized on the blockchain as one way of luring financial service providers. Currently, conventional banking providers do not fancy rendering their services to firms within the marijuana sector, mainly because the banks cannot offer services to businesses considered illegal under federal law.
The result has been that businesses in the sector have mainly relied on cash to run their day-to-day operations. This has in turn exposed these entrepreneurs to potential robbery, among other hazards. Just as well, the process of handling cash—a huge amounts of it—can be tricky and is simply cumbersome.
That could change in California with the new bill that wants these businesses, which already have considerable crypto holdings, to taxes using stablecoins. The obligations can be settled directly to the state government or be channeled via a crypto payments processor. Payments would have to be converted into U.S. dollars and paid into the county government account. The bill also proposes that the tax office would be required to consult with the State Treasurer’s office in order to find the best way to implement the new tax payment method when adopted into law.
Fiona Ma, the state treasurer recently revealed that the use of marijuana for medical reasons has increased rapidly in the state, currently used by over a million residents. Estimates put potential revenues from the industry by 2020 at over $5.1 billion.
Over the years, cannabis businesses and pot users have looked to crypto as an anonymous and easily accessible method of accepting or paying for weed. Bitcoin has been one of the most popular coins used. However, as the federal government still classifies marijuana as illegal despite being legalized in many states, a number of other lesser-known coins are on the front line in being used for crypto payments. Some of these coins include PotCoin, CannabisCoin, and DopeCoin.