Lawmakers in California have introduced a new bill geared towards cannabis companies. Assembly Bill 953 was introduced on February 21st. This new piece of legislation would allow cannabis-related businesses to pay taxes and fees in digital currency—more specifically, in stablecoins.
Assembly Bill 953
If passed, Assembly Bill 953 would allow all California-based tax offices (state, city, and county) to accept stablecoins as a form of payment. Cannabis companies would be able to pay their cultivation taxes with stablecoins. At this time, a specific stablecoin has not been identified, and it remains unknown if all forms of stablecoins will be accepted.
Assembly Bill 953 wouldn’t go into effect until January 1st, 2020, if it is approved at all.
Currently, the state of California imposes a 15% state excise tax on cannabis and cannabis products. Because of this, cannabis companies tend to owe quite high taxes.
Another issue many cannabis businesses have run into is securing simple financing services from banks. There are a few states that have legalized the use of recreational cannabis, but it is deemed illegal under federal law. Most banks are secured by the Federal Deposit Insurance Corporation (FDIC) and won’t finance ‘illegal’ activity.
Due to this, cannabis companies hold hundreds of thousands of dollars in cash at any given time. Assembly Bill 953 is not geared towards boosting cryptocurrency or the legitimacy of stablecoins, but more to reduce the vast majority of cash that gets flooded into the tax offices across the state.
California’s State Treasurer, Fina Ma, recently testified in front of the US House Committee regarding the amounts of cash collected. Ma said:
“Duffel bags and sometimes suitcases of cash would arrive quarterly at some of our designated offices and some business owners had to drive 350 miles to pay their taxes.”
It remains unknown at this time when Assembly Bill 953 could be approved.
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