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Marijuana startups pay taxes with bags of money

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Charity Gates calls her contact every month to schedule a visit. When the time comes, she and a colleague travel the streets of Denver in her car. They pick up packs of $ 20 bills that she keeps in several vaults after deliveries.

She counts the money and puts it in a canvas bag or bag, and leaves carrying up to $ 20,000 each day.

Marijuana startups pay taxes with bags of money
Marijuana startups pay taxes with bags of money

Passing through the armed security guards of the building, she enters a room and hands the bags of money to a staff, which submits the contents to a mechanical count and counterfeiting machines.  That’s how she pays her taxes.

Gates runs Colorado’s Best Dabs, a company that processes cannabis and extracts concentrated oils used to make edible products such as brownies and teas.

It is among the entrepreneurs who are increasingly operating in gray areas in judicial terms, as more and more states are legalizing marijuana in the United States, but the federal government continues to consider it illegal.

People may have the right to open stores and sell their products in the 30 states that have legalized the medical or recreational use of the substance but are deprived access to banks that offer them checkbooks or checking accounts.

“We are subject to municipal government fines if we move a place switch, but we are not entitled to a bank account,” says Gates.

This has resulted in an economy where all transactions take place in cash.

After the Federal government’s ban on medical marijuana quietly comes to an end

Companies that grow, process, or sell marijuana-related products reported an estimated revenue of $ 12.9 billion in 2017, according to Colorado-based BDS Analytics. Up to $ 4.7 billion in taxes were collected on these transactions.

For most other companies, paying taxes means using the Federal Electronic Tax Payment System, an online portal that allows transfers of bank accounts to the Treasury Department.

“Imagine paying $ 20,000 in cash for a counting machine, one bill at a time,” Gates said of the lawsuit. “Each visit may take two or three hours.”

The US federal government has a history of hitting the cannabis industry hard. But this is starting to change, which may mean looser federal regulations in the future.

Blocking access to the federal banking system poses a number of risks, said Peter Conti Brown, an assistant professor of legal studies and business ethics at the University of Pennsylvania.

The possibility that the declared income of a business could be less than the actual earned income earned is increased, and the same can be said about the probability of theft by employees and armed robberies.

Some savings institutions and small banks whose charters are patronized by the state rather than the federal governments have attempted to fill this void by offering basic banking services to the cannabis sector.

George Allen, president of Acreage Holdings, said that the companies he invested in were able to obtain banking services in the 11 states in which they operate, among other things, allowing them to pay their taxes through wire transfers or checks.

Tai Cheng, vice president of the Aloha Green Apothecary in Hawaii, operates his company primarily using cash payments.

Aloha Green Apothecary in Hawaii
Aloha Green Apothecary in Hawaii

Aloha Green grows marijuana plants, processes the crop and sells various marijuana products at a dispensary in Honolulu. Cheng says he could not find an institution in the state that would allow his company to open an account.

Places like Hawaii have begun testing technology solutions in the absence of legislative solutions.

Marijuana Market in the United States

US $ 12.9 billion was the estimated revenue of the cannabis sector last year

US $ 4.7 billion is the total of taxes paid

30 states have already legalized the medical or recreational use of marijuana

The government has been allowing the use of the CanPay mobile payment system, operated in partnership with a Colorado savings institution and aimed at medical marijuana patients. Dispensaries can use the money received through CanPay to pay taxes and other expenses, through checks or wire transfers.

But for Cheng, so far, the number of patients using the system is too low to become a reliable source of funds.

He says he only wants the right to operate like any other company. “We pay our taxes, as we should, and the government happily accepts payments,” he says. “It’s ridiculous to have to go through all this difficulty.”

THE NEW YORK TIMES

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