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  1. Taxes
  2. Tax Returns

Pot Dispensaries Flood California Tax Office With Weed-Smelling Cash

By:
Denver Nicks
2 min read
A vendor weighs buds for card-carrying medical marijuana patients attending Los Angeles' first-ever cannabis farmer's market at the West Coast Collective medical marijuana dispensary, on the fourth of July, or Independence Day, in Los Angeles, California on July 4, 2014 where organizer's of the 3-day event plan to showcase high quality cannabis from growers and vendors throughout the state. - Frederic J. Brown—AFP/Getty Images
A vendor weighs buds for card-carrying medical marijuana patients attending Los Angeles' first-ever cannabis farmer's market at the West Coast Collective medical marijuana dispensary, on the fourth of July, or Independence Day, in Los Angeles, California on July 4, 2014 where organizer's of the 3-day event plan to showcase high quality cannabis from growers and vendors throughout the state. Frederic J. Brown—AFP/Getty Images

The dissonance between the legal status of marijuana in some states and its total ban by the federal government has led to some awkward arrangements. In Oregon, where pot is legal for both recreational and medicinal use, it’s legal to fly around the state with weed but not outside state lines with it.

In California, marijuana is legal for medicinal uses but it's still a schedule 1 narcotic under federal law, alongside the likes of cocaine and meth. That means the businesses that operate in the medical marijuana industry don’t have legal access to traditional banks. And that means they are absolutely swimming in cash.

Come tax day, that creates some logistical hurdles for California’s Board of Equalization. Dispensaries are legal businesses in California, so they are obliged to pay taxes, but they can’t write a check or make an electronic deposit like a normal business. Instead, people come to the tax office with massive bundles of cash. One California office recently processed a cash tax payment for $400,000, the Guardian reports.

The BOE estimates that in 2015 it took in $200 million in cash tax payments from the legal weed industry.

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

And it’s not just the safety issue of carrying large sums of cash. The tax office reportedly smells strongly of pot at times, since the cash takes on the odors of the dank places it’s stored.

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