Extra security sought as medical pot taxes are expected in cash

The state tax department needs extra security guards, armored car services and new surveillance equipment to prepare for a surge in cash payments to cover the taxes paid to the state for medical marijuana sales.

Hawaii’s medical marijuana dispensaries are expected to pay about $400,000 a month to cover their state taxes, and those payments likely will be in cash because the dispensaries generally are unable to use banks for their financial transactions.

Marijuana is still illegal under federal law, and Hawaii banks have been reluctant to accept dispensaries as customers.

Mallory Fujitani, spokeswoman for the state Department of Taxation, said the cash tax payments from dispensaries might include both excise taxes and payments for items such as payroll withholdings.

“We don’t know if they’re paying their employees in cash and they’re just having them deposit separately,” she said. “We really need to work with each of the licensees individually.”

The dispensaries are all trying to find “workarounds” to cope with the fact that they do not have access to normal banking services, she said.

“At this point we don’t have a good handle on it yet,” Fujitani said. “We’ll be meeting with all of the licensees individually to find out what the particular situation is.”

The $400,000-a-month estimate for tax revenue from the dispensaries was based on the number of medical marijuana patients and the amount that can legally be sold to each patient per month, she said. Hawaii law allows medical marijuana patients to purchase 4 ounces in a 15-day period.

The tax department is asking lawmakers to authorize an extra $118,000 for more security staff and armored car services on Oahu, Maui, Kauai and Hawaii island.

Maria E. Zielinski, director of taxation for the state, said the department is also asking for an extra $500,000 that will be used “for basically hardening our facilities” to prepare for the extra cash payments at tax department district offices on each of the islands.

The tax department will likely amend that request later, after tax officials get a more accurate estimate of the cost of the security improvements that are needed, Zielinski said.

Hawaii passed a law in 2000 that allowed marijuana to be used for medical purposes, but patients had no legal way to buy the drug. A new law passed in 2015 authorized the state Department of Health to issue eight licenses for a total of 16 medical marijuana dispensaries in Hawaii.

Eight dispensaries have been authorized, including one on Kauai, two on Maui, three in Honolulu and two on Hawaii island.