Pubdate: Wed, 18 Dec 2013
Source: Stranger, The (Seattle, WA)
Copyright: 2013 The Stranger
Contact:  http://www.thestranger.com/
Details: http://www.mapinc.org/media/2241
Author: Goldy

A STATE-RUN MARIJUANA BANK

It Would Solve Two Problems at Once

State senator Bob Hasegawa (D-11) has been championing a state-run
bank for years, based on a successful state bank in North Dakota, and
if you've been wondering what he's been smoking in pursuit of this
seemingly quixotic effort, well, he may have just answered your
question. The latest iteration of Hasegawa's bill attempts to recast
his proposed state bank as "the sole depository for in-state marijuana
producers, processers, and retailers."

It's a clever hack on top of Hasegawa's previous state bank proposal
that provides all the benefits of helping state government while
addressing a huge unmet need created by the passage of Initiative 502:
the lack of access to legal banking services by Washington State's
large and growing legal marijuana industry.

"I run a legitimate business that is compliant with state law," says
Alex Cooley, vice president of Solstice, a marijuana grower. "Having
full banking services would be of massive value."

Banks are reluctant to provide services to state-sanctioned marijuana
businesses out of concern of running afoul of federal money-laundering
laws-although there is no history of the Feds prosecuting banks for
serving medical marijuana businesses. And some in the marijuana
industry are reluctant to deposit large sums in banks out of fear of
leaving their assets open to federal seizure.

The result is a largely cash-based business in a state industry that
is projected to soon generate more than $2 billion of legal revenue a
year. It's not even clear that banks will accept deposits from the
state of the $533 million a year in marijuana tax revenue Washington
is expected to clear by 2015.

SB 5955 would address these problems by creating the "Washington
publicly owned trust" to accept deposits from government agencies and
legal marijuana businesses. The state would be required to deposit
marijuana tax revenue in the trust, although businesses would be free
to use private banks if they chose. The state, rather than the Federal
Deposit Insurance Corporation, would guarantee deposits, providing
additional protections from federal seizure, while profits from
banking operations would be returned to the state. As a lending
institution, the trust would also help the state with an additional
mission to "facilitate investment in, and financing of, public
infrastructure systems that will increase public health, safety, and
quality of life, improve environmental conditions, and promote
community vitality and economic growth."

But the big news for marijuana businesses is that they would finally
have a bank willing to serve them. "Oh God, I'd love that," exclaimed
one hash-oil manufacturer, who insisted on remaining anonymous for
fear of losing his current bank account. "We all have problems
banking. I'd be able to trust people more. I wouldn't feel like I
could be robbed."

In addition to services that most businesses take for granted, like
credit card processing and lines of credit, Cooley says he is eager to
free himself of the burdens that come with a cash business. To avoid
flags that could freeze his account, Cooley limits cash deposits to
less than $10,000 at a time and less than $20,000 a month. Which is
difficult to do, Cooley explains, "when the majority of your customers
are on an all-cash system."

"Forcing us into an all-cash system makes us targets for crime,"
Cooley explains, while making appropriate regulation difficult.

Hasegawa's state pot bank would solve this. And if the legislature
really wants to make I-502 work, it will finally give his state bank
proposal the serious consideration it deserves.
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MAP posted-by: Matt