Written by Gabriel Dillard
A California lawmaker has proposed a novel bill to help cannabis businesses pay their taxes.
Under AB 953, from Assemblymember Phil Ting (D-San Francisco), cannabis businesses would be allowed to use so-called “cryptocurrency” as an accepted form of payment for cannabis-generated taxes.
California’s $1 billion cannabis industry is conducted all in cash because the federal prohibition on marijuana prevents federally insured banks from participating. As a result, businesses often have to hire armored trucks to deliver hundreds of thousands of dollars in tax payments to state and local governments, Ting said in a news release.
“It’s very risky for cannabis businesses to transport large amounts of cash in order to pay their tax bills. Too many things can go wrong. Cryptocurrency offers a solution that’s safer and cheaper for the industry,” Ting said. “Lowering the cost to pay taxes will also help combat black market activity and encourage more businesses to get licensed.”
Bitcoin is the best known of these cryptocurrencies, and perhaps the best example of the market’s turbulence. It hit a high of $20,000 on Dec. 17, 2017. Today, bitcoin is worth just shy of $4,000.
To address volatility, Ting’s AB 953 would call for the use of stable coins, or virtual currencies collateralized by assets, such as U.S. Dollars. Being pegged 1:1 to the Dollar will give the business and government agencies certainty to collect exactly what is due, according to Ting.
Ting notes that Ohio began accepting business tax payments via virtual currently in November 2018. Available only for businesses, Ohio’s cryptocurrency program has been used by two companies so far, reported The Journal-News.