Assembly Bill 953 For Weed And Stablecoins
California lawmakers recently introduced a new bill aimed at cannabis companies. Lawmakers introduced Bill 953 on February 21 and under the bill, cannabis-related businesses will be able to use stablecoins to pay taxes and other fees. This is a new step for digital currencies, which have not been permitted as a form of payment. Of course, the legislation will need to be approved before companies can actually use the form of payment.
If the bill passes, the state will be able to accept the form of payment from companies that decide to use it. Though a specific stablecoin has not been identified as the payment that the state would like to receive, that type of information is still far from now. The primary objective is to get the bill passed. Further, it is highly unlikely that the bill will go into effect until January 2, 2020.
Passage of the bill is bound to help cannabis companies as well. Right now, there is a 15% state tax on cannabis and cannabis products. Not only do companies have to deal with the high tax, but cannabis companies have had trouble receiving financing from banks and worse, cannabis is still illegal under federal law. Thus, banks rationalize the unwillingness to provide loans as a desire to not get involved in “illegal” activity.
Even though cannabis companies have had trouble getting loans from banks, they tend to hold a lot of cash as well. This means that the companies transact using their high amount of cash flow. The Bill would reduce this cash flow into the state’s cash offices by converting it to stablecoins instead.
Moreover, Fina Ma, the state’s treasurer recently testified about the cash,
“Duffel bags and sometimes suitcases of cash would arrive quarterly at some of our designated offices and some business owners had to drive 350 miles to pay their taxes.”
The bill seems like a good idea, but there is no indication as to whether the bill will be approved.