California’s Cannabis Cash Conundrum; Could a Bank be the Solution?

California waits with bated breath for November 8, 2016, when its voters will decide if the state will join Washington, Colorado, Oregon and Alaska in legalizing the adult use of recreational cannabis. Along with the excitement, however, comes anxiety for California regulators, who must figure out how to deal with the huge influx of cash into state tax coffers. California’s regulators are not strangers to the cannabis cash conundrum, as they have already collected cannabis taxes in bags filled with tens, and sometimes hundreds, of thousands of dollars in cash. Without a means of curbing the cash, the passage of Prop. 64 would mean that California regulators will have to grapple with bigger bill bundles, making it even harder for them to regulate and control California’s cannabis industry.

The California Board of Equalization’s Chairwoman, Fiona Ma, is well aware of the challenges that cannabis cash presents. She estimates that California currently collects only one third of the taxes that medical marijuana businesses owe to it. However, because cash leaves no records, she cannot know the exact figure. Prop. 64’s seed-to-sale “track and trace” system would make tax collection easier by tracking all cannabis transactions through a state mandated traceability system. Without adequate banking and cash reduction options for cannabis businesses, however, California regulators will have no choice but to continue collecting cannabis taxes in cash. To solve this, Chairwoman Ma has proposed creating a state bank to accept cash deposits and allow California businesses to make electronic transfers to pay their taxes. While such a bank would lessen cannabis cash for state regulators, it will not diminish the current cash dependency that affects cannabis businesses and consumers.

Some believe that the solution to the cannabis cash and banking problem can only come from the federal government reclassifying cannabis or barring federal regulators from prosecuting banks that serve state licensed cannabis businesses. Given the Drug Enforcement Agency’s refusal to reclassify cannabis earlier this year, this solution is likely years away.

In the meantime, private companies, like PayQwick, have successfully solved the cannabis cash and banking conundrum by focusing on compliance to facilitate business bank accounts for their clients and allowing them to electronically pay each other. To fully eliminate the need for cash, PayQwick allows consumers to use its platform to pay for cannabis via loadable cards, a smartphone app and soon, debit and credit cards. While the options for cutting cannabis cash vary, one thing is clear; California regulators must soon come up with a state-wide solution.



Talk about killing two birds with one stone!

Yes, folks, it’s here:  Cannabis infused wine! Also known as ‘green wine’ it is said to give you a more mellow physical body high instead of a mental one and you get to taste delicious wine with all of the medicinal benefits.

Interestingly enough, there are actually early records dating back to the Han Dynasty in China that indicate that this combination was used to ‘knock out patients in surgery’.  Its great healing powers were also used by the early Christians and by cults in ancient Greece.  There seemed to have been a strong tradition of adding ‘fortifying herbal additives to wine’ that are clearly documented by archeological evidence.  Imagine that!

Canna Vine is one such company.  Its canna-wine is only available in California and then only if you have a medical marijuana license.  The other states that have legalized recreational marijuana, Colorado, Washington and Oregon do not permit it.  And it comes at a price.  The cost for just a half of a bottle is said to cost you between $120 to $400 dollars.

Singer Melissa Ethridge in partnership with Greenway Compassionate Relief has a wine they call ‘No Label’ and they serve up a Shiraz and a Grenache.  Ever since she underwent chemo therapy 12 years ago, she has been a fan and user of medicinal marijuana.  Comedian Chelsea Handler serves the infused libation to her guests and also boasts her oil infused mushroom soup.  Paring our food and wine are we?

From our ancient roots to our present day boom in this creative marijuana industry, Cannabis infused wine sounds quite enticing.

Anyone want to hop a bus to Napa?



The town of Desert Hot Springs sits elevated above the Coachella Valley in California and boasts the world’s finest natural hot mineral aquifers and natural mineral waters and has been referred to as a spa destination city.  The town has thousands of gorgeous mountain preserves and offers wonderful hotel retreats and fine restaurants.

Entrepreneurs now have their sights set on this ‘get away from it all’ town ever since it became the very first municipality to authorize and regulate cannabis cultivation in 2014.  The town that was practically bankrupt is now seeing an influx of investors and entrepreneurs jockeying for position to get into its market.

Although not a single cultivation business has opened, likely due to a seven figure entry requirement, that hasn’t stopped investors from wanting to build several million square feet of cultivation projects.  They see it as a perfect location to set up their operations specifically because of its ‘proximity to the massive Los Angeles market’.  The state of California has Proposition 64 on this November’s ballot to legalize recreational marijuana.

As of now, there are 6 developers who are renovating existing buildings that should be open soon, according to the mayor Scott Matas, and there are agreements with 6 other developers who have purchased land on which to build.  We are talking close to 2 million square feet of grow between the 12 developers!

Recently Greta Carter sold her marijuana business in Washington and moved to Desert Hot Springs and is building a 30,000 square for cultivation site and she also bought a building in nearby Cathedral city which has also approved a cultivation ordinance.

Officials and the entrepreneurs have a not so surprisingly ‘cordial and cooperative relationship’ as Desert Hot Springs is anticipating a 20-million-dollar annual tax revenue!

However, not everyone thinks that this location is exceptional.  Aaron Herzberg, chief counsel at CalCann Holdings, a cannabis cultivation leasing company in Costa Mesa, California says that “it has been two years since the ordinance has passed and not a single place has opened yet”.  Apparently some of the properties zoned for this purpose have no electric or water infrastructure.  The Mayor, Matas, believes that they will get caught up on that issue.

Developer Oxford Properties plans to take matters into their own hands and will build its own substation to power its complex.

With its ideal climate and the city’s willingness to work with their new wave of investors and entrepreneurs, Desert Hot Springs will likely be a magnet for the marijuana industry for some time to come.  Should Prop 64 pass this November, more California cities will be faced with similar, complicated but potentially and incredibly profitable decisions.

Fingers crossed!