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California lawmaker raises possibility of delaying licensing of recreational marijuana sales

State Sen. Holly Mitchell (D-Los Angeles) says she's concerned about banks being unwilling to handle marijuana sales revenue because the drug is still illegal under federal law. (Rich Pedroncelli / Associated Press)
State Sen. Holly Mitchell (D-Los Angeles) says she's concerned about banks being unwilling to handle marijuana sales revenue because the drug is still illegal under federal law. (Rich Pedroncelli / Associated Press)

Amid concerns that California may not be ready to issue licenses for the sale of marijuana by next year, one state lawmaker raised the possibility Thursday of the Legislature stepping in to delay taxes and permits.

At a hearing Thursday, the Senate Budget and Fiscal Review Committee heard testimony from Legislative Analyst's Office representatives who said it is unclear whether the Trump administration will enforce federal laws that designate pot as an illegal drug, complicating California's rollout of Proposition 64, which legalized the sale of marijuana for recreational use.

State Sen. Holly Mitchell (D-Los Angeles), chairwoman of the committee, said she was concerned about banks being unwilling to handle marijuana sales revenue because the drug is still illegal under federal law, which could require license holders to transport large amounts of cash to pay state taxes and fees.

“Does the Legislature have the authority to delay implementation of either the tax collection or the Jan. 1 due date with regard to licensing?” Mitchell asked attorneys at the hearing. “Do we have the authority to pause this process given its complexity, given the lack of clear sense of direction from the federal government at this point?”

Proposition 64 sets an excise tax at 15% for the sale of marijuana, but the state can delay collection of the tax while it puts in place a secure system for handling large amounts of revenue, according to Richard Miadich, an attorney who helped write the initiative.

The initiative requires the state to issue licenses for the sale of marijuana for recreational use by Jan. 1, 2018. But the state could decide to issue provisional licenses until it is ready to implement the detailed process for background checks and issuing more permanent licenses, Miadich said.

The panel took no action Thursday.

State finance officials estimate 4.8 million Californians will buy pot at the start of the new legalization system, with taxes to the state growing from $600 million in two years to nearly $1 billion by fiscal year 2021-22.

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