Shut out of banking services, marijuana-related businesses in states where the substance is legal operate as cash-only businesses, but that may be changing.
Bob Leeds, owner of Sea of Green Farms, a recreational pot grower and processor in Seattle, inspects small “clone” plants growing under lights in Seattle. (AP/Ted S. Warren)
The U.S. House of Representatives on Wednesday voted 231-192 in favor of a bipartisan-backed piece of legislation that blocks the Treasury Department from using federal funds to penalize banks or other financial institutions for providing services to marijuana businesses in states where the substance is legal.
The amendment to the financial services budget bill was introduced by Reps. Denny Heck of Washington, Dana Rohrabacher of California, Ed Perlmutter of Colorado, and Barbara Lee of California, and essentially gives the go-ahead for the banking industry to offer its services to marijuana businesses.
The legislation also bars the Internal Revenue Service, an agency within the Treasury Department, from auditing and treating marijuana businesses as criminal enterprises and forcing these businesses to pay taxes on their gross revenue, which is what is required of cartels and other large criminal enterprises under Tax Code Section 280e.
This most recent House-passed legislation may not be “as flashy a win as some other drug policy reforms of recent years,” said Law Enforcement Against Prohibition’s executive director Major Neill Franklin (Ret.), but “banking regulations have been one of the most significant obstacles to creating a well-run, safe legal marketplace.”
For years those in the legal marijuana industry have been asking the federal government for approval to be regulated by the banking industry so that, like other legitimate businesses, customers could use credit card services and business owners would not be forced to pay employees in cash, as they would be able to deposit money in a bank, write checks, etc.
Due to marijuana’s status as an illegal drug on the federal level, federally insured banks are currentlyprohibited from knowingly handling any marijuana-related money. Banks can’t even help marijuana-related businesses move money to a safe location using an armored vehicle, and fear of money laundering charges has prompted many financial institutions to deny services to marijuana-related businesses in states where the substance is legal.
As a result, marijuana businesses are forced to operate solely using cash, which legalization advocates say not only creates logistical issues, but is a huge public safety issue.
Mitch Morrissey, district attorney for Denver, said that what makes dispensaries particularly attractive to thieves is how much money a thief can make. “You hit a 7-Eleven, you’ll get 20 bucks,” Morrisseysaid. “You hit a dispensary, you’ll get $300,000 on a good day.”
News reports on the crimes associated with operating cash-only businesses have prompted some, including Morrissey, to call for an end to marijuana legalization. But as many marijuana legalization advocates point out, dispensaries are not robbed or burglarized any more than liquor stores, banks or pharmacies, and they say that given the number of dispensaries, the crime rate is particularly low at these businesses.
Legalization advocates argue that the solution to the cash-related crime problems is not making marijuana illegal once again, but allowing marijuana businesses to work with banks so they are no longer operating as cash-only businesses.
“No matter how you feel about taxing and regulating legal cannabis,” it’s in no one’s best interest to operate a business exclusively in cash, Taylor West, deputy director of the National Cannabis Industry Association, told MintPress News earlier this year. She added that as more people become aware of the large amount of cash at these dispensaries, crime could get worse.
“This is a huge victory for those who care about the smart regulation and control of marijuana,” Franklin, of Law Enforcement Against Prohibition, said when talking about the legislation. “What we’re seeing is not just that one of the most gridlocked Congresses in history is able to pass marijuana reforms, we’re seeing that both Democrats and Republicans think of these reforms as smart, politically viable options to a failed drug war.”
Mike Liszewski, government affairs director for Americans for Safe Access, which has been lobbying Congress on these banking measures, said this vote not only sends a message to the Obama administration that they should “stop meddling in state and local marijuana laws,” but that the U.S. Senate should vote to respect medical marijuana laws across the country as well.
Currently, 23 states are recognized by legalization groups as having a medical marijuana program, though it should be noted that not all programs are yet in effect. A handful of other states have also passed legislation legalizing cannabidiol oil, or CBD oil, a form of medical marijuana known among the public as a strain that helps children who have seizures.
House Approves Marijuana Industry's Request For Banking Access
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