Pubdate: Thu, 10 Oct 2013
Source: Boulder Weekly (CO)
Copyright: 2013 Boulder Weekly
Contact:  http://www.boulderweekly.com/
Details: http://www.mapinc.org/media/57
Column: Weed between the Lines
Author: Leland Rucker

BANKING ON CANNABIS STILL A RISKY PROPOSITION

As has been stated here before, one of the major stumbling blocks for
any legal cannabis business to operate successfully is the lack of
access to banks. It is also the biggest deterrent to proper regulation
of said businesses.

To that end, John Hickenlooper and Jay Inslee, governors of Colorado
and Washington, sent a letter Oct. 2 to the most important names in
the U.S. banking system: Secretary of the Treasury David Lew; Martin
Gruenberg, chairman of the FDIC; Richard Cordray, director of the
Consumer Financial Bureau; Ben Bernanke, chairman of the Board of
Governors of the Federal Reserve; Comptroller Thomas Curry; and Debbie
Matz, chairwoman of National Credit Union Administration.

Hickenlooper and Inslee ask those in charge for flexibility in federal
banking regulations that will allow legal cannabis businesses -
growers, processors and retail sellers - into the U.S. banking system.
Currently, with cannabis illegal on a federal level, legal marijuana
businesses in 20 states and the District of Columbia are pretty much
stuck dealing only in cash.

Since most of us take banking, checking, ATMs and smartphones for
granted when conducting business, it might be hard to understand how
difficult it is to conduct a business outside the banking system in
2013.

When is the last time you worked for someone who paid you in bills and
coins? Marijuana businesses in Colorado pay millions of dollars per
year in state taxes, all in cash. Where do you keep all that money
(after Breaking Bad, I keep thinking holes in the desert) and how do
you move cash around without becoming a target for thieves?

"Access to the banking system by these state-licensed businesses is a
necessary component in ensuring a highly regulated marijuana system
that will accurately track funds, prevent criminal involvement and
promote public safety," the governors wrote. "In order to achieve the
mutual federal and state goal of establishing tightly controlled
marijuana regulatory systems, we urge you to issue inter-agency
guidance that will allow legal, licensed marijuana businesses access
to the banking system."

That pretty much says it all. They reference the Aug. 29 Justice
Department memo that indicated that cannabis businesses that follow
the law won't be prosecuted on a federal level, and remind them that,
by allowing licensed businesses into the banking system, they can be
better monitored and regulated so that doesn't happen.

Clarity and federal government are two words not used often these days
in the same sentence, so don't hold your breath. It took the Justice
Department 10 months to deliver the Aug. 29 memo. But for legal
growers, processors and retail outlets, with less than three months
before retail sales are legal, this can't happen soon enough.

Due to an addition to the federal tax code in the 1980s, cannabis
businesses also aren't allowed to take basic business deductions for
expenses that most other businesses take for granted, either, and that
needs to change, too. Like access to banks, this isn't a partisan
issue. Liberal Oregon Rep. Earl Blumenauer teamed with California
tea-partier Dana Rohrabacher to introduce a bill last month that would
allow legal cannabis operators to the same deductions other businesses
enjoy.

Colorado began taking applications for commercial retail sales of
cannabis Oct. 1. Only current dispensaries are allowed to apply at
this time, which gives them a nine-month window to establish their
businesses before newcomers are allowed to try to cash in. The state
has to reply to the applications by Jan. 1, the first day that sales
will be legal to adults over 21 in Colorado.

Along the Front Range, Denver is the only major city taking
applications, so at least for the time being it will be the closest
place Boulder residents will be able to buy outside the still-thriving
illegal markets. The second reading for Boulder City Council's
marijuana rules and regs is Oct. 22, with no date set as to when
businesses can apply for city licenses.

Besides Denver, a host of mountain towns will be allowing retail
stores, so you can plan mini-trips to Aspen, Basalt, Black Hawk,
Breckenridge, Carbondale, Crested Butte, Durango, Eagle, Frisco,
Georgetown, Glendale, Glenwood Springs, Idaho Springs, Leadville,
Manitou Springs, Nederland, Northglenn, Red Cliff, Salida,
Silverthorne, Silverton, Steamboat Springs and Telluride for your needs.

Finally, some encouraging news. Colorado farmer Ryan Loflin began
harvesting 55 acres of hemp on his rural farm this month. This is
significant. Of all the ridiculous things the federal government has
done with regards to cannabis, outlawing hemp, an industrial product
that the feds don't seem to be able to differentiate from cannabis
with higher THC levels, is perhaps the dumbest, and it's been going on
dating back at least to the 1930s.

Amendment 64 allows farmers in Colorado to grow hemp, and the
Industrial Hemp Regulatory Committee, a state task force, has
completed a set of preliminary rules for hemp production that will go
to public comment and then to lawmakers for passage.

This harvest is more symbolic than anything, but let's hope that
Loflin's harvest is the first of many. Hemp fiber, oils and seeds are
used in a host of products, and until reefer madness took hold in
America, it was grown here. It's about time U.S. farmers finally
reclaim a product that today has to be imported from other countries,
mostly China, the largest producer of hemp. American exceptionalism at
its nadir.
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MAP posted-by: Matt