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U.S. NEWS Thursday 1 december 2016

US Financial Front:

The tax man cometh: California ponders legal pot, paying up

MICHAEL R. BLOOD the nation’s most populous said. pot and grow six marijuana sible violence against tax
Associated Press state. A draft report made California was the first state plants at home. It also al- inspectors or investigators
LOS ANGELES (AP) — Cali- an early estimate of new to embrace legal, medici- lows cities and counties to who go looking for hidden
fornia’s legal marijuana jobs that would be needed nal marijuana two decades impose their own regula- grows. Meanwhile, with pot
industry is expected to to police the market and ago, and the board esti- tions and taxes on recre- remaining illegal on the
involve everything from make sure everyone is pay- mates there are 1,700 dis- ational marijuana. federal level, it’s unclear
backyard growers to what stance the incoming
sprawling fields in the farm Donald Trump administra-
belt, storefront sellers along tion will take with the new
rural roads to chain-store marketplace. California
like outlets in Los Angeles. and other weed-friendly
State tax collectors are states might be in for trou-
taking initial steps to get a ble: Trump’s pick for attor-
hand into that vast, emerg- ney general, Alabama Sen.
ing economy, with billions Jeff Sessions, has called
of dollars at stake in the fu- marijuana a danger that
ture for the state treasury. should not be legalized.
State analysts have esti- Twenty-eight states and
mated that state and local Washington, D.C., allow
governments could even- marijuana for medical or
tually collect over $1 billion recreational purposes.
annually from the produc- The prediction by state
tion and sale of legal pot. analysts of $1 billion annu-
Just how big a job that will ally in tax revenue from pot
be, no one knows. could be an elusive target.
The state has no reliable It could be years before
way to predict how many kinks are worked out of the
new retailers will enter the system, and it is not known
marketplace when mari- how much of the robust ille-
juana becomes legal in gal market will come under
2018. It’s estimated there the legal umbrella.
could be 25,000 cultivators New positions could range
who will have to register Rolie Gonzalez III displays a branch of marijuana buds taken for a plant on the farm of grower from inspectors who would
and begin paying taxes. Laura Costa, near Garberville, Calif. California’s legal marijuana industry is expected to involve visit growing sites and pot
But it’s only a guess how everything from backyard growers to sprawling fields in the farm belt, storefront sellers along rural shops, investigators who
many operations making roads to chain-store like outlets in Los Angeles. State tax collectors are taking initial steps to get a would probe possible felo-
hand into that vast, emerging economy.
money off the fragrant, (AP Photo/Rich Pedroncelli) ny crimes and auditors to
sticky buds will try to remain check the books.
hidden in the black market. ing up: by 2021, 114 posi- pensaries operating in the Proposition 64’s approval New systems need to be
“It’s just going to be the tions and nearly $20 million state. The California vote comes with two new state designed. Because mari-
wild, wild West out there,” in funding. But with so many on Nov. 8 represented the taxes on legal weed: Con- juana is illegal on the feder-
predicted Jerome Horton, unknowns, several board national legalization move- sumers will pay a 15 per- al level, the staff report said
who sits on the state’s tax- members acknowledged ment’s biggest victory to cent excise tax on the retail tax payments from mar-
collecting Board of Equal- those figures would likely date and sets the stage selling price, which applies ijuana-related business-
ization. The panel on Tues- need to be updated within for a sweeping transforma- to recreational and medi- es must be made in cash.
day started framing its job, months. tion. The new law attempts, cal marijuana. Separately, The agency is researching
approving on a divided Horton, at the meeting at least in theory, to tame a cultivation tax will be how that could be done on
vote a proposal to request in Culver City, California, a market that now ranges imposed on all harvested such a large scale.
funds to begin gradually called the projections from legal, medicinal pro- marijuana that enters the Inevitably, some won’t pay
adding staff in anticipa- “grossly understated.” duction and sales to vast commercial market. Lo- up. “Since the marijuana
tion of collecting taxes Board member Diane Har- illegal grows operated by cal governments can also excise tax and the culti-
from the legal sale and key alluded to the chal- drug cartels. take a bite, and dozens of vation tax represent new
cultivation of marijuana. lenges of taking what has In general, the state will communities are ready to tax liabilities for taxpayers,
The board’s action came been largely an illegal treat cannabis like it does impose new levies and reg- prior experience shows
three weeks after voters marketplace and moving alcohol. Taking effect in ulations. With pot-growing having new taxes due re-
approved Proposition 64, it under state government. 2018, the law allows peo- long a growth industry for sults in new delinquencies
which legalized the recre- “Nobody knows how this is ple 21 and older to legally criminal gangs and cartels, from taxpayers,” the report
ational use of marijuana in really going to work,” she possess up to an ounce of there are fears about pos- said.q