The move to provide legal banking services for marijuana dealers is gaining momentum as the Attorney Generals from 18 States apply pressure on Congress.
They have sent a letter to Congress this January 2018 to amend legal statutes to allow banks the freedom to deal with marijuana-based business owners.
The AG’s are from 18 States that have legalized cannabis usage and have asked for the implementation of legal statutes to create exemptions for banks that chose to deal with marijuana-based businesses.
Cannabis is the fastest growing industry
“Cannabis is arguably the fastest growing industry in the world”, according to ArcView Market Research which has predicted projected sales of $21.6 billion by 2021. This figure represents an annual compound growth rate of 26 percent.
Yet owners of companies dealing in marijuana and related products have nowhere to deposit their funds.
Refusing marijuana businesses access to banks is dangerous
The continued stubborn refusal to allow access to banking services is exposing legal marijuana industry operatives to the constant threat of violent crime. Many of these businesses are sitting with hundreds of thousands of dollars in cash with nowhere to deposit the funds.
In fact, last year Julia Gosnell and business partner Kary Radestock, who own a cannabis packaging company, were told by an accountant to keep their cash “under the mattress”. Like most cannabis entrepreneurs they are paid mostly in cash by their clients. Gosnell said she was told by the accountant to “stash (the cash) somewhere”. Gosnell said his advice didn’t sound legal but was told that “everyone operates that way”.
Why banks should be able to open their doors to the marijuana industry ?
This disclosure by Gosnell further underlines the move by the 18 State AG’s who argue that it serves no purpose to have cannabis companies working in a “grey market” that forces them to operate cash-run businesses because the doors to banks are closed.
The AG’s want legislation to be put in place to make banks a “safe harbor” for owners of marijuana businesses in those States that have already legalized the sale and production of weed. They point out that not only would this move inject billions of dollars into the banking industry, but also improve law enforcement to better monitor legal marijuana transactions.
Another glaringly obvious fact in favour of an open-door banking policy is that the Government would benefit from a substantial tax windfall generated by the billion-dollar cannabis industry.
These States have legalized marijuana for medicinal use ?
Arizona, Arkansas, Connecticut, Delaware, Florida, Hawaii, Illinois, Louisiana, Maryland, Michigan, Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, Rhode Island, and West Virginia.
These States have legalized marijuana for recreational use
The trail-blazers are Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington. So, if you want to be able to walk into a cannabis dispensary and pick up some weed, these are the States in which to live. You must be of legal age though.
The anomalies of the law
Confusion about the legalities of the marijuana industry is not surprising when one considers that while more than half of the States have legalized weed, it remains steadfastly illegal in terms of present Federal laws.
This stubborn approach by the Federal Government has created an atmosphere of uncertainty in banking circles because they are afraid that they will be breaking the law if they open their deposit vaults to marijuana business owners.
The Feds regard weed as an illegal substance that is classified by the Drug Enforcement Administration on the same level as heroin. So, despite legalization in many States, marijuana is a Schedule One substance, on a par with heroin, LSD and ecstasy, in terms of the Controlled Substances Act.
It’s no wonder then that bankers are afraid to be seen as allied with the drug trade. As a result, it is estimated that 70 percent of cannabis-related businesses have nowhere to turn to bank their vast amounts of cash.
Enter State Treasurer John Chiang
California State Treasurer John Chiang is spearheading the Cannabis Banking Working Group (CBWG) in an effort to legalize a marriage between bankers and weed industry growers and distributors.
Chiang quite rightly points out that this industry will generate about $1 billion in tax revenues in 2018 – a vast amount of money which will be lost to the Government unless some form of compromise can be reached.
The CBWG has established that the real power to improve the current untenable situation lies with the Federal Government. The CBWG is also conducting a legal analysis into the feasibility of forming an independent State-approved financial institution to service the marijuana industry.
Two key issues are being examined:
—–>Can California create a “weed-friendly” State bank or credit union without being in violation of existing Federal laws?
—–>In terms of existing Federal laws, would any deposits and/or tax revenues then be subject to asset forfeiture?
Among Chiang’s CBWG proposals is the implementation of effective and safer ways to handle cash deposits and tax collections.
He also advocates the establishment of a multi-state consortium of representatives and other interested stakeholders to pursue the enforcement of changes to Federal laws that are presently barring cannabis banking.
Federal laws should focus on cannabis banking issues.