Cannabis business might create a financial black market

Cannabis sales tax money might go underground

CALEXICO, Calif. - Brawley city officials said legal cannabis may create an illegal financial industry.
City Mayor Pro-Tem Donnie Wharton said, “Because of the fact that it’s not federally legal, really can’t use the federal banking system. So, it really can create an underground market as to how money is cashed, as well as maybe how the end product exchanges hands.”

Calexico city officials said they’re aware of that.

Council Member Bill Hodge said, “The problems of them - meaning the entrepreneurs - having to deal with money...Believe it or not, it forces them to do some strange things. Unfortunately, they can’t use the bank because that’s on a federal level and it’s against the law.
Cannabis sales will be hard to track.

Calexico Council Member Armando Real said, “Some cities are taxing them based on overall sales, which is tough to do.”

Real said they’ve found a way to make money from the cannabis business.

“The best thing is charge taxes, a rate based on the square footage of the building that they are cultivating,” Real said.

He said they’re focusing on something measurable.

“If they can’t put money in the bank, then they have to invest in something and more likely that’s going to be either growing their company or maybe buying real estate, or something of that nature, which would create more jobs,” Real said.

He said even if the money goes underground, Calexico’s profits will stay on top.

“We don’t have to worry if they sold or whether they grew one plant or ten thousand plants, the City of Calexico will make the same revenue year after year,” Real said.

Calexico is currently processing five applications for permits to cultivate cannabis locally. No permits have been given, yet.

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