AGENDA 21 RADIO

BY CHRISS STREET NEWPORT BEACH, CA

California marijuana retailers will be toting huge amounts of cash to the Franchise Tax Board and the IRS as pot still is too illegal for banks to inhale.

The California Cannabis Working Group organized by the state Treasurer John Chiang published “Banking Access Strategies for Cannabis-Related Businesses” in November to prepare for the ‘California Control, Regulate and Tax Adult Use of Marijuana Initiative’ (Proposition 64) that would launch legal recreational marijuana sales on January 1^st. But despite expectations of big sales and a flood of new taxes, the Group warned that no regulated bank would be willing to provide checking services to pay employees and taxes.

With legal and medical cannabis still categorized under the U.S. Controlled Substances Act as a Schedule 1 substance, California licensed marijuana businesses on Jan. 15 made their first payments under the federal tax code’s USC 280E, just like is required for illegal drug traffickers and international criminal cartels.

Despite a tax rates that are about 70 percent higher than fully-legal businesses, substantial numbers of licensed marijuana businesses were showing up at IRS locations with large bundles of cash to make their first monthly social security, Medicare, and employee tax withholding.

The IRS responded by jacking-up cash-counting capacity by hiring new staff Denver, Seattle and Los Angeles. Both federal and state officials expect that the April 15 as the first corporate quarterly tax installment due date for 2018 will see huge cash payments.

There are no published statistics on payments yet, but even with the State of California’s Bureau of Cannabis Control (BCC) getting off to a slow start issuing licenses for Proposition 64’s January 1 launch, more than 1,600 cannabis operators from Shasta Lake to the City of San Diego now legally hold licenses to grow, distribute or retail by Jan 29. Another 2,174 supposedly medical marijuana dispensaries are also now open.

The BCC has projected that a legal cannabis industry will grow at about the same 28 percent compounded rate of the roll-out of Internet broadband access beginning in the 1990s. The BCC expects California pot revenue of $7 billion and private sector employment of 100,000, to spike to $20.2 billion and 150,000 by 2021.

The BCC also predicts state and local marijuana tax revenue will skyrocketing from $1 billion to $3 billion over the same period. Other state and the federal government are literally drooling over a study by analytics firm New Frontier Data estimated that marijuana legalized at the 50-state federal level, would generate federal income tax, sale taxes, payroll deductions would equal $132 billion, including $51.7 billion of sales tax.

But all this activity without access to checks and bank accounts, continues to be generated cash that us becoming a prime target of armed criminals. About 30 armed robberies of marijuana shops have taken place in San Diego County; high profile murders and muggings in West Los Angeles, and a number heists in Northern California.

The number violent crimes against legal cannabis operators is believed to be much higher, but many marijuana entrepreneurs seem willing to take being ripped off from time-to-time, so long as they can maintain a low profile and ride the legal boom.