Pubdate: Thu, 17 Jul 2014
Source: Denver Post (CO)
Copyright: 2014 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: David Migoya
Page: 14A

POT SHOPS FIND DOOR TO BANKS SLIGHTLY AJAR

Bill OK'd By U.S. House May Signal Opportunity for Accounts

The U.S. House of Representatives on Wednesday passed by 39 votes a
measure that bars treasury and securities regulators from spending
money to penalize financial institutions that work with legal
marijuana businesses.

But they did so without exactly saying banks could openly, and without
worry, work with the industry-what banks have asked for in writing-
and without decriminalizing the drug at the federal level.

In a separate vote, the House rejected a measure that would have
blocked federal guidance given to banks in February for how to work
with the marijuana industry- a road map that's all but frozen
financial institutions from providing the services because it lacks
guarantees against being penalized.

The amendment the House approved to appropriations bill House
Resolution 5016 - co-sponsored by Rep. Ed Perlmutter, D-Lakewood, and
three other representatives - takes aim at the Department of the
Treasury's oversight of banks by narrowing the scope of earlier
directives the agency gave for banking with the marijuana trade.

It was approved 231-192. The defeated amendment, proposed by Louisiana
Republican Rep. John Fleming Jr., lost 236-186.

With Rep. Denny Heck, D-Wash., offering the amendment, Perlmutter's
co-sponsors included Rep. Barbara Lee, D-Calif., and Rep. Dana
Rohrabacher, R-Calif.

Perlmutter called the appropriations-bill amendment "a positive step
forward for financial institutions and for legitimate marijuana
businesses."

"It is not fair to small businesses and employees in Colorado, and in
the 33 other states and District of Columbia, where some form of
marijuana is legal or decriminalized, to be forced out of the banking
system and discriminated against by the federal government,"
Perlmutter said in a statement.

Industry proponents hailed the measures as groundbreaking, while
bankers offered a more conservative opinion.

"This is a huge step forward for the legal cannabis industry," said
Aaron Smith, executive director of the National Cannabis Industry
Association. "Access to basic banking services is one of the most
critical challenges facing legal cannabis businesses and the state
agencies tasked with regulating them."

Although representatives back the measure, approval in the Senate -
where the bills head next - is far from certain, bankers say.

"If this provision eventually becomes law- and one vote is far from
that- an initial reading is that this appears to remove some of the
barriers for the (Office of the Comptroller of the Currency) to
financial services being available to marijuana businesses," said Don
Childears, president and CEO of the Colorado BankersAssociation. "It
is not clear if this applies to the Federal Reserve or the FDIC.
Questions still outnumber firm answers."

The move comes on the heels of another bill, HR 5106, which passed in
May. It restricts the U.S. Department of Justice and the Drug
Enforcement Administration from meddling with state-approved medical
marijuana programs.

Both measures are headed to the Senate. It is unclear when they will
be taken up.

"If implemented, this amendment will help alter the current untenable
status quo that forces otherwise law-abiding businesses to operate on
a cash-only basis, making them a target for criminal actions and
unduly burdening their operations," said Erik Altieri, communication
director for NORML, a national advocacy group to legalize marijuana.

Although the measure doesn't specifically say banks can deal with
marijuana businesses with impunity - they still must follow strict
banking laws requiring due diligence in dealing with customers and
ensuring a proactive anti-money-laundering program- advocates say it
helps.

"It's essentially forbidding the use of funds to target these banks,"
said Taylor West, deputy director of NCIA. "Given that many banks
seemed to feel that the guidance issued in February was not concrete
enough to give them the confidence to start taking cannabis related
clients, it would be a big deal to put that policy into actual law."

Two U.S. senators- Dianne Feinstein, D-Calif., and Charles Grassley,
R-Iowa - have challenged the treasury department's guidance rules,
issued by its Financial Crimes Enforcement Network branch, saying they
usurped federal laws that still hold marijuana illegal

Colorado's Marijuana Industry Group said the lack of banking services
can be solved only at the federal level.

"State-licensed cannabis businesses would like to pay their federal
income taxes with a check instead of cash," MIG executive director
Michael Elliott said in a statement.

The Denver Post wrote of an Internal Revenue Service practice of
charging a 10-percent penalty to businesses that pay employee
withholding taxes in cash rather than electronically. Marijuana
businesses without bank accounts suffer disproportionately because
they have no choice but to pay in cash, according to a challenge in
U.S. Tax Court.

The story prompted Perlmutter and U.S. Sen. Michael Bennet to urge the
IRS to temporarily suspend the penalty until the marijuana-banking
issue can be resolved.

Wednesday's action in Congress, however, would not directly impact how
the IRS regulation is applied.

Colorado and Washington are the only two states where recreational
marijuana sales are legal. Voters in Alaska and Oregon are set to take
up the issue in November elections.

Twenty-three states, including Colorado, and the District of Columbia
have legalized medical marijuana.
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MAP posted-by: Matt