Unfair Penalty Lifted From Cannabis Industry
Sacramento – The lack of access to financial institutions continues to be a significant challenge for the cannabis industry, forcing cannabis businesses to pay their tax obligations using cash. However, Assembly Bill 1741 authored by Assemblymember Rob Bonta (D-Oakland) and signed by the Governor, removed an unfair fee levied on cannabis businesses that pay the taxes they owe using cash.
"Now that California is establishing a regulatory system for the influx of businesses into the cannabis industry, we need to do everything we can to encourage tax compliance in this billion dollar industry. It's unfair to penalize cannabis businesses for their lack of access to banks. Assembly Bill 1741 (Bonta) is a step forward for this industry while we continue to find a path for California's cannabis businesses to get access to financial institutions," said Vice Chair of the California State Board of Equalization Fiona Ma, CPA and co-sponsor of AB 1741.
"I want to thank Governor Brown for signing my AB 1741 into law. AB 1741 will create equity for taxpayers within the cannabis industry by removing an unfair penalty on cash tax payments made to the state. The new law will further incentivize the cannabis industry to legally comply with California's tax code, which in turn will generate more tax revenue and further stimulate California's economy," said Assemblymember Rob Bonta.
"Discouraging cash payments only increases non-compliance in an industry that wants to comply with its tax obligations. That is why CCIA is committed to helping to advance tax policies that support a compliant cannabis industry, which is why we were pleased to co-sponsor AB 1741," said California Cannabis Industry Association Executive Director Lindsay Robinson.
Before the Governor signed AB 1741, the law required businesses that have monthly sales, use, cultivation, and excise tax payments averaging $10,000 or more to submit their payments using electronic fund transfers. If they don't do so, penalties will be imposed. The Legislature passed AB 821 (Gipson) in 2016, which removed the 10 percent fee on all non-electronic funds transfer (non-EFT) payments over $10,000 dollars, however, AB 821 only applied to sales and use taxes on medical cannabis. AB 1741 (Bonta) removes the 10% fee on non-EFT payments over $10,000 for cultivation and excise taxes on medical and adult-use cannabis, creating equity for the taxpayers in this industry. AB 1741 further incentivizes the cannabis industry to legally comply with California's tax code, which in turn would generate much more taxable revenue and further stimulate California's economy.
Board Member Fiona Ma, CPA, was elected to the Board of Equalization in November 2014, to represent the Second Equalization District. She represents 9.5 million residents in many of California's coastal counties, from Del Norte to Santa Barbara, including the entire San Francisco Bay Area. Ms. Ma served in the California State Assembly from 2006 to 2012, serving as the first Asian woman Assembly Speaker pro Tempore since 1850. While in the Assembly, Ms. Ma focused on improving California, authoring legislation to create jobs and grow the state's economy. As an Executive Board Member of the National Conference of State Legislators, she worked to keep California's economy competitive with other states. Ms. Ma has been a Certified Public Accountant (CPA) in California since 1992. For more information, visit Board Member Ma's website.
The five-member California State Board of Equalization (BOE) is a publicly elected tax board. The BOE serves a significant role in the assessment and administration of property taxes.
Note: This news release may discuss complex tax laws and concepts. It may not address every situation, and is not considered written advice under Revenue and Taxation Code section 6596. Changes in law or regulations may have occurred since the time this news release was written. If there is a conflict between the text of this news release and the law, decisions will be based upon the law and not this news release.