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Cash-only marijuana dispensaries flood California tax office

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The Sacramento branch of the California tax collection agency reeks of marijuana.

That’s because it’s cash day at the collection center – when marijuana dispensary owners are allowed to bring in paper money to pay their quarterly sales tax bill – and the smell of their inventory clings to everything.

California, like all states with any form of legalized marijuana, faces a growing problem over the federal government’s position that cannabis remains a Schedule 1 illegal drug, classified the same way as meth or cocaine, with no legal uses – and therefore no legal access to traditional banks.

That means medical marijuana dispensaries, along with growers, distributors and other marijuana-related businesses that are operating legally under state laws, have no choice but to be cash-only businesses. They can’t write checks, deposit money in financial institutions or make credit card transactions.

“We’ve been a cash industry for ever and it has been quite a problem,” said Kimberly, the director of a non-profit dispensary in Sacramento who asked that her last name not be used for safety reasons. “We don’t want to drive around town paying our bills in cash. We want to be able to just go to the bank.”

Kimberly was at the tax office making a payment of more than $30,000, but officials with the agency, the board of equalization, say that is a relatively small amount. Recently at the San Francisco office, a $400,000 payment came in, carried in “a big bag”, said George Runner, a BOE board member. The day before in Sacramento, $150,000 came in as a single payment.

That kind of cash being brought to a non-secure facility raises safety issues, as well as practical ones – issues that the BOE and other agencies are scrambling to address as new medical marijuana laws in the state increase the amount of taxes being paid.

The BOE estimates that last year, it took in about $200m in cash payments from marijuana businesses, though it’s “hard to tell” what the actual amount is, since, Runner said, “we don’t always know who is a cannabis-related business”.

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