Pubdate: Mon, 23 Sep 2013
Source: Seattle Times (WA)
Copyright: 2013 The Olympian
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Jordan Schrader, The Olympian

STATE SEEKS BANK WILLING TO HANDLE NEW POT REVENUE

Bids Sought

Money From Taxes, Fees Imposed on Marijuana Businesses

OLYMPIA - Wanted: A bank for state government. Must offer attentive 
customer service. Must be able to handle several deposits a day with 
drop-offs of up to 40 bags at a time. Must allow an account to be 
overdrafted during the day by more than $1.2 billion.

Oh, and must accept proceeds from the sale of pot.

As Washington shops for a bank, meeting that last demand might not be 
as hard as it sounds.

The state's current banker already has agreed to it, according to the 
state treasurer, who says that despite federal restrictions 
Washington shouldn't face reprisals for banking and spending the 
revenue that will come from pot taxes and fees.

"I'm not too worried about it," Treasurer Jim McIntire said. "It's 
actually one of the advantages of having Bank of America as your 
contractor. It's unlikely, I think, that the federal government would 
raid them. And they're big enough to look out for themselves on this."

Bank of America's sevenyear contract to hold the state's main account 
ends June 30, and the state asked for bids this month in a request 
that calls out deposits of marijuana revenue as a must-have.

In the meantime, the state expects to start depositing revenue from 
Initiative 502, which legalized the recreational use of marijuana. 
The Liquor Control Board will receive its first fees in November from 
applicants asking the board for licenses to grow and sell the drug, 
and the Department of Revenue starts collecting taxes as soon as March.

Much of the revenue could be in cash, since banks are reluctant to do 
business with pot dealers without changes in federal policy that 
treats banking of marijuana proceeds as money laundering.

Handling all those bills presents a hurdle for the state Department 
of Revenue. But some say a bigger problem would be trying to store 
and spend the money.

The uncertainty was reflected in last week's quarterly report from 
Washington revenue forecasters, who said they wouldn't count I-502 
revenue in their projections until the Liquor Board finishes writing 
rules and "an agreement is reached with the federal government with 
respect to the legality of depositing cannabis-sourced tax receipts 
into state accounts."

As recently as July, Liquor Board member Chris Marr said not a penny 
could be deposited without that treat residents like people, which is 
to say to treat them with respect.

It is different from other residences I've visited. It felt less 
institutional, more like an upscale hotel. One floor has a man cave, 
where guys can retreat when they feel the need to man up. The floor 
for people who have memory problems has a number of interesting 
touches. In one of the halls, I saw a baby carriage with a doll in 
it. A staffer told me they have to keep replacing the dolls because 
residents walk off cuddling them.

There is a door that opens onto an enclosed area made to look like a 
campground, complete with a camping trailer outfitted like it was 
actually being used by a family, and a 1955 car with luggage in the 
back. Residents can sit in the car or the trailer and replay their own outings.

"What I love about it," Belafonte said, "is that you can make the 
right thing profitable."

In the long run, the right thing, whether it makes money or not, is 
always profitable. risk of tainting other state money - unless 
federal authorities took action. Marr has dialed back his alarm but 
said he would still like clarity from the federal government.

Bank of America has "checked this out with their compliance 
department and they don't see it as any different from say, medical 
marijuana or any other activity," Assistant Treasurer Wolfgang Opitz 
said. "There could be other illegal activities going on in this state 
that happen to be in the tax base."

Medical-marijuana sellers are not regulated or licensed by the state 
and they operate in what some see as a legal gray area. But they are 
supposed to pay sales tax and business tax, which goes into the 
state's bank account.

The new I-502 businesses are different. They will be licensed by the 
state, so revenue collectors can't plead ignorance of the companies' 
business practices. Liquor Board Director Rick Garza said he asked 
other state officials if the licensing would affect the state's 
ability to deposit the revenue. Not necessarily, he was told. 
Washington is not the first state to license marijuana businesses, 
and the federal government has never cracked down on states' bank 
accounts, Garza said.

The next problem to resolve is marijuana businesses' inability to 
bank. Marr worries about the inefficiency of collecting cash and 
hopes for a resolution.

"We're really not equipped to accept cash," he said.

Marr hopes a solution will come now that the U.S. Department of 
Justice (DOJ) has decided to allow recreational-marijuana sales in 
Washington and Colorado.

Even if all those questions are answered, it will be hard for 
forecasters to say how much revenue the state should expect.

If tax rates don't change, I-502 might bring in between $1.4 billion 
and $3.2 billion over a decade, consultants told the Liquor Board.
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MAP posted-by: Jay Bergstrom