California Bill Would Legalize Crypto for Tax Payments From Cannabis-Related Businesses

Lawmakers in the United States state of California have introduced a bill to allow cannabis-related business to pay fees and taxes in stablecoins.

The bill was introduced by the California State Assembly on Feb. 21.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 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 allows for the immediate conversion of any payments made by stablecoins into United States dollars and deposit into an account of that jurisdiction."

Cannabis has been legalized in several states in the U.S. However, cannabis businesses have difficulty securing simple financial services from banks, the vast majority of which are secured by the Federal Deposit Insurance Corporation, and are thus prohibited from servicing an industry that is still deemed illegal under federal law.

The bill is apparently an attempt to curtail the vast amounts of cash that end up in state tax offices and need to be processed.

California State Treasurer Fiona Ma recently testified before the U.S. House Committee on Financial Services regarding the tax collection process for cannabis businesses.

In 2017, the Dash network began implementing Dash as a payment option in the cannabis industry's point of sale devices.

Other U.S. states have also introduced bills that would allow tax payments in cryptocurrency.

In January, legislators in the U.S. state of New Hampshire proposed a bill to accept Bitcoin for state payments.

"This bill requires the State Treasurer to develop an implementation plan for the state to accept cryptocurrencies as payment for taxes and fees beginning July 1, 2020," the document reads.