Fintech
Desert Hot Springs Adopts Monarch Cannabis Tax Management
Desert Hot Springs, California, is outsourcing its cannabis tax management to Monarch Technologies, an industry leader hemp payment and compliance solutions. The company announced the partnership, which aims to improve regulatory compliance and streamline tax revenue collection through Monarch’s tax management software.
In an exclusive interview with Benzinga, Christian FeaCEO and co-founder of Monarch Technologies, shared the details of this collaboration. He also spoke about the impact on cannabis, often overlooked financial technology sector.
Addressing Tax Compliance Challenges
“Cities, counties and states face increasing complexity in calculating, assessing, collecting and remitting tax revenue from cannabis businesses,” Fea said. “Most of these government entities have passed laws, ordinances and regulations in the last five years that, technologically, often rely on the back end of old legacy software systems.”
Surprisingly, Fea said many municipalities still rely on outdated and unreliable methods like Excel spreadsheets or do it by hand. Monarch’s compliance system automates the entire process, solving these problems and making tax more reliable systems.
Fea explained how Monarch won the contract after joining the League of California Cities in 2023, representing most of the state’s 482 cities. The League advocates for cities on key topics, tax issues, and pertinent policies. This membership led to the partnership with Desert Hot Springs (DHS). After presenting the solution at the annual fall conference, Monarch’s platform caught the attention of city officials. After meetings, the DHS City Council approved the Monarch Tax Authority (MTA) platform, effective July 1, 2024. The city currently oversees 46 cannabis licenses.
Read also: Cannabis Taxes: Burden, Potency, or Price? Impact on Businesses, Patients, and Consumers
Improving Cannabis Tax Management
“The accurate and precise data captured by the MTA through its Marijuana Enforcement Tracking Reporting Compliance (METRC) surveillance system at dispensaries is shared with city officials in real time and in accordance with the law. This allows city officials, compliance and finance departments to better monitor compliance and backlogs and quickly manage and respond to budget items,” Fea said. METRC It is a seed-to-sale tracking system widely adopted in the cannabis industry.
Frank LuckinoDesert Hot Springs’ newly appointed City Manager likes the idea of streamlining and improving tax management: “Partnering with Monarch allows us to achieve this by leveraging their cutting-edge technology and expertise, while reducing the internal resources we must commit to overseeing the tax and compliance components of our program. This is a win-win situation for our community and local cannabis businesses,” Luckino said.
Fea added that “The key goals and features of Monarch’s Compliance System include accurate fee calculations, comprehensive assessments, timely remittances. Also, establishing bank accounts for cannabis operators and issuing detailed relevant reports. Desert Hot Springs’ key goals include increased compliance, predictable monthly revenue, operational efficiency, and increased transparency.”
The Future of Cannabis Financial Technology
Fea also shared his predictions for financial technology in the cannabis sector:
“The Marijuana Policy Project reports that taxes from the licensed sale of state-regulated cannabis products totaled more than $4 billion in 2023. The need to transition payments from a ‘cash is king’ mentality to an automated, compliant digital system is inevitable,” Fea said. “Safety and security considerations alone suggest that cashless transactions via ACH (Automated Clearing House) and mobile phone apps will be the mechanism by which government entities, cannabis operators, and the general public pay for legal cannabis products in the future.”
In the first three months of 2024, California cannabis companies reported $1.2 billion in taxable salesalthough the industry has been strugglingSo it is essential to ensure that every penny is counted.
To learn more about fintech, tax, and compliance in the cannabis industry, join us at the 19th Benzinga Cannabis Capital Conference, taking place in Chicago on October 8-9. Buy your tickets now before prices rise following this link.
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