A new bill currently under review by lawmakers in California is seeking to approve the use of stablecoins to collect tax payment from Cannabis-related businesses.
The Bill — Assembly Bill 953 — is trying to solve a problem facing local tax authorities and players in the cannabis industry.
The Difficulty in Paying Cannabis-related Taxes and State Fees
Until now, the method of collecting taxes from these businesses is not smooth, primarily because the production of Cannabis is a criminal offence under Federal law.
Cannabis-related businesses, thus cannot access banking services easily because the banks are registered with Federal Deposit Insurance Corporation (FDIC). The FDIC cannot offer its service to businesses counted as illegal by Federal laws.
To pay state fees and taxes, businesses would have to travel long distances to tax houses and also carry a bulk of cash which gives extra work to officials and heightens the risk of theft.
If the new bill is approved and enforced with its Jan 1, 2020 mandate, then tax offices in California would have the option to collect these fees and taxes in stablecoins or fiat-pegged cryptocurrencies.
A section of the bill explaining how the process will work shows that each country or city in California would have the power to decide how to employ the use of stablecoins.
For instance, they will choose whether to :
Accept stablecoins directly into a digital wallet controlled by that jurisdiction or
Utilize a third-party digital asset payment processor. In this case, the processor would convert the received tax proceeds to the U.S dollar and transfer it to an account maintained by the jurisdiction.
Meanwhile, California is not the first U.S State to propose the use of cryptocurrencies in the collection of public taxes. Stmarket.co reported in January that authorities in Ohio approved the collection of taxes in widely accepted cryptocurrency, Bitcoin.
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