This is the fourth of a five-part series dealing with the rescission by U.S. Attorney General Jeff Sessions of the Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases.
This article focuses on retail-level frauds. It proposes a limited purpose crypto currency. At the retail level the MJ Freeway or METRC software essentially functions as a marijuana-industry-specific point of sale (POS) system. It is common in retail for different industry sectors (restaurants, hotels, convenience stores, or gasoline stations) to have market-specific POS systems that are molded to fit the unique characteristics of their trade.
The first marijuana-specific STS inventory management/ POS system was created by the co-founder of MJ Freeway.
This paper uses the State of Washington as a template for retail-level marijuana frauds. The State of Washington presents a classic example of where technology-based sales tax fraud is a known problem in cash-based businesses (notably restaurants). Washington also has, far and away, the highest tax on marijuana in the country, and Washington collects 47.3% of its revenue (not including local government taxes) from the retail sales tax. Technology has been the backbone of the State’s economy for years, and one would expect that ECR/POS system security measures would be mandatory and abundant. But, Washington has nothing.
The fraud that is discussed in this paper is carried out is with Zappers, Phantomware, SSaaS, and Dark Cloud functionality. The solution proposed is technology-intensive third-party security mandated by the State for each marijuana POS system. Modeled on the Quebec, Rwanda, or Fiji applications.
Richard T. Ainsworth & Brendan Magauran,
Taxing & Zapping Marijuana: Blockchain Compliance in the Trump Administration Part 4
Available at: https://scholarship.law.bu.edu/faculty_scholarship/1406