LOS ANGELES (CNS) — The Los Angeles City Council has voted to explore the sticky issue of how to collect taxes on marijuana businesses that are legal in the state but remain illegal on the federal level.
In the November election, California voters approved Proposition 64, which immediately made cannabis possession legal for adults 21 and over and legalized the sale of recreational marijuana as of Jan. 1, 2018.
All those legalized pot shops could generate upwards of $100 million in taxes for the city’s general fund within the first few years, according to Councilmember Paul Krekorian’s motion, which passed on a 10-0 vote.
But legalized pot presents a difficult issue for the city, because the federal government currently recognizes marijuana as a schedule I drug, which means many banks will not do business with the marijuana industry.
“The lack of a legitimate banking system has the de facto effect of turning the vast majority of cannabis business activity into a cash only business,” the motion states.
The council has directed the Office of Finance to report back within 45 days with a detailed plan to ensure the full tax compliance of marijuana businesses and manage the intake of the taxes.
On Jan. 1, 2018, the state is also set to begin enacting the Medical Cannabis Regulation and Safety Act, which was passed by the state Legislature in 2015 and creates a comprehensive state licensing system for medical marijuana businesses.
On March 7, Los Angeles voters are also set to vote on Measures N and M, which both would begin the taxation and regulation process of marijuana businesses in the city.