California will not be ready to fully collect taxes from its recreational marijuana market at the start of next year because not all of its tens of thousands of growers will be enrolled in the system, a state lawmaker said on Tuesday.
Residents of California, which produces about 60 percent of the country's marijuana, voted in November to legalize recreational use of the drug. Taxes on it are expected to bring in an estimated $1 billion a year for the state.
"When it comes to the state's cultivation tax collection system ... we will not be ready on day one," state Senator Mike McGuire said while chairing an oversight hearing on cannabis taxes and regulatory timelines in the capital, Sacramento.
"Having (the system) up and running and having it integrated into the community with businesses and tax-paying entities uploaded are two different things," the Democrat said.
Most of the state's marijuana is grown in remote regions that lack broadband and even working phone lines, making it difficult to reach and register growers in the new systems, said McGuire, who represents the state's pot-producing North Coast region.
California's "track and trace" system, which is designed to follow each marijuana plant from seed until final sale, may also not have registered all the state's growers and sellers before Jan. 1, the deadline for the state to have its marijuana regulations in place.
Like a handful of other states that have voted to legalize recreational marijuana, California's industry faces headwinds including a banking system that refuses to work with producers and a federal government that still considers marijuana an illegal drug on par with heroine and methamphetamines.
McGuire pushed back on the federal government's view during the hearing, calling it "hogwash." He said he was nervous that new U.S. Attorney General Jeff Sessions, who has been critical of marijuana use in the past, will try to take cannabis policy "back to the 1950s."
"This country has evolved and I would hope that our federal leaders have evolved as well," McGuire said.
The U.S. Justice Department did not return a request for comment.
(Reporting by Rory Carroll; Editing by Peter Cooney)