California legislators have introduced a bill that might require the state to simply accept stablecoins from cannabis-related businesses seeking to pay their excise or cultivation taxes.
Lawmakers within the U.S. state of California have introduced a bill to permit cannabis-related businesses from growing of white widow autoflower seeds to other derived products to pay fees and taxes in stablecoins. The California State Assembly introduced the bill on Feb. 21.
Cryptocurrency pegged to a fiat currency
Assembly Bill 953 would allow the state, city, and county tax offices in California to accept stablecoins — cryptocurrency pegged to a physical asset or a fiat currency — from cannabis-related companies seeking to pay their excise or cultivation taxes, with effect from Jan. 1, 2020. The bill further reads:
"The bill would authorize that city or county in determining that method to either accept stablecoins directly into a digital wallet controlled by that jurisdiction or to utilize a third-party digital asset payment processor that permits for the immediate conversion of any payments made by stablecoins into us dollars and deposit into an account of that jurisdiction."
Cannabis has been legalized in several states within the U.S from growing blueberry feminized seeds to selling of derived products. However; cannabis businesses have difficulty securing simple financial services from banks, the overwhelming majority of which are guaranteed by the Federal Deposit Insurance Corporation (FDIC), and are thus prohibited from servicing an industry that's still deemed illegal under federal law.
Cannabis dispensaries can hold many thousands of dollars in cash at any given time. The bill is seemingly an effort to curtail the vast amounts of money that find yourself in state tax offices and wish to be processed. California treasurer Fiona Ma recently testified before the U.S. House Committee on Financial Services regarding the collection process for cannabis businesses. She stated:
"Duffel bags and a few times suitcases of money would arrive quarterly at a number of our designated offices, and some business owners had to drive 350 miles to pay their taxes."
Cannabis industry's point of sale
In 2017, the Dash network began implementing Dash as a payment option within the cannabis industry's point of sale devices. In doing so, Dash reportedly aimed to save lots of the industry 10-15 percent because the decreased flow of folding money will stymie the necessity for cash boxes, safes, and guards.
Other U.S. states have also introduced bills that might allow tax payments in cryptocurrency. In January, legislators within the U.S. state of latest Hampshire proposed a bill to accept Bitcoin (BTC) for state payments. "This bill requires the treasurer [...] to develop an implementation plan for the state to simply accept cryptocurrencies as payment for taxes and costs beginning Dominion Day, 2020," the document reads.
Crypto to shop for Cannabis for Tax Remittance
A Californian politician has become the primary official to use cryptocurrency to get cannabis within the U.S. to advocate for cannabis tax remittances via stable coin.
A Californian politician has become the primary official to use cryptocurrency to get cannabis within the U.S.
A handout shared with Cointelegraph on Sept. 11 revealed that Berkely City Councilmember Ben Bartlett used Bitcoin Cash (BCH) and, therefore, the stablecoin Universal Dollar (UPUSD) to form the acquisition at Ohana Cannabis, a dispensary in Emeryville, CA.
The purchase was a live demonstration of crypto-financial technology conducted by blockchain company Cred and, therefore, the Blockchain Advocacy Coalition. The latter may be a group of California-based businesses and consumers that employ market transparent blockchain legislation at a state and national level.
Cannabis Tax Remittance Via Stablecoin
According to the handout, the initiative forms a part of the Blockchain Advocacy Coalition's sponsorship of a replacement bill (AB 953) that might enable California to accept cannabis tax remittance via stablecoin. During the demonstration, the Cred team was reportedly available to elucidate the ins and outs of blockchain and stablecoin technology to local elected officials.
The transaction involved Ohana accepting Bitcoin Cash by using Cred's LBA token as a translation utility, with sales and city tax proceeds settled in Universal Dollar.
Universal Dollar — which runs on the Ethereum block-chain and is pegged to the U.S. dollar — was developed by the Universal Protocol Alliance, a coalition of block-chain firms including Cred, Uphold, and Block-chain at Berkeley.
In a statement, Dan Schatt — co-founder of Cred and therefore the Universal Protocol Alliance — outlined:
"Not only does crypto end in significant cost reduction for consumers and merchants, but it also enables the highly productive collection, transparency, and predictability for city and state governments."
Crypto for the Green Rush industry
As the handout notes, 70% of California's state cannabis industry is unbaked, significantly increasing both the risks and costs faced by local governments required to accept tax remittance in large cash deposits.
Council member Bartlett remarked that in providing a cash-free mechanism for cannabis tax remittance, the proposed AB 953 bill represents a bit of innovative legislation appropriate for the 21st-century so-dubbed Green Rush industry.
The politician has now reportedly requested Berkeley City staff to organize a report on acceptance of cannabis taxes using stablecoin technology.
In 2018, the state of Ohio was hailed for its pioneering acceptance of Bitcoin (BTC) for enterprises' tax liabilities. Several other U.S. states had pursued — but not yet succeeded in implementing — similar initiatives before Ohio.