Even if the money was made through illegal means, the U.S. federal government is still after cannabis money to make its taxes bigger and bigger.
Banks or debit card services like Visa have to comply with the U.S. federal law when it comes to processing cannabis money.
New Frontier Data, a specialist on cannabis information, has estimated that marijuana business owners across the U.S. will owe $2.8 billion in taxes to the federal government.
Banks in states, where marijuana has already been legalized, started tightening the noose on their transactions with cannabis business after U.S. Attorney General Jeff Sessions rescinded an Obama-era rule, which brought back the possibility of federal intervention in these states. Cannabis on a federal level is illegal, however, there are 29 states that allow medical marijuana and eight others that allow its recreational use.
Speaking to CNN, Zach Lazarus, owner of a dispensary in San Diego, he pays his federal taxes in bags of cash, funny enough, these green papers smell like marijuana.
“We have a security detail with weapons that help us to get to the right destination to pay our taxes.”
“Because everything’s in cash we have to drive to our local IRS offices and pay.”
But not everyone is reporting their at times illegal business. According to New Frontier Data, the legalization of marijuana would bring $18 billion in federal marijuana taxes by 2025.
Illegal Money Gets Taxed
Richard Auxier, a research associate with the Tax Policy Center, told CNN that the government itself is treading in murky waters or let’s say the grey market because it wants the money.
“If you’re making money illegally, that’s still income, and that money is supposed to go to the IRS,” he said. “That’s where the old joke about Al Capone comes from, that he didn’t report his income from illegal activities.”
Auxier also said the shady rule applies to illegal sports betting.