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The pot tax conundrum

While recreational marijuana has provided a windfall in new taxes for some states, it also introduces some knotty administrative issues. Since the federal government still considers marijuana a controlled substance, many businesses have a hard time utilizing traditional banking services. That mean taxes on marijuana are often delivered in cash.

In this highly technological e-everything world, that can be a challenge to state revenue departments.

Cash needs to be handled in a different way. It requires special equipment and additional staff to count and deal with the money. New controls and security measures are also needed when you have lots of cash on hand.

Then there’s the odor. It turns out that marijuana cash, often delivered in person by retailers, smells like marijuana.

Oregon is solving this problem by renovating the Department of Revenue building in Salem with a new five-station payment area, according to an article in The Portland Tribune. That’s expected to cost in the $800,000 range. A second round of bidding on Oregon’s request for proposals for a contractor, was closed yesterday. (The first round, earlier this year, didn’t get the department what it wanted.)

Not all retailers pay their taxes in cash. Some have found banks that will do business with them, but there’s still a lot of uncertainty in the banking industry about enforcement of federal laws, particularly given the current administration’s unfriendly stance to legalized marijuana.

Governing published a useful map at the end of January, showing state marijuana laws.


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