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 a 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 Gov. 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 Assemblyman 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 nonelectronic funds transfer, or non-EFT, payments over $10,000, however, AB 821 only applied to sales and use taxes on medical cannabis.

AB 1741 (Bonta) removes the 10-percent 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.