Pubdate: Wed, 27 Aug 2014
Source: Seattle Times (WA)
Copyright: 2014 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Page: A9

FEDS DRAG FEET ON BANKING FOR MARIJUANA INDUSTRY

WASHINGTON'S legal-marijuana market is still in its infancy, but in 
the first month of stores being open for business, the state has 
collected about $750,000 in state excise taxes.

That's welcome news, because those sales represent a poke in the eye 
- - albeit a small jab - at the underground black market. Revenues will grow.

But when they do, the problem with banking access for the marijuana 
market will also grow. The state Legislature hasn't tried to untangle 
that problem, and the federal response thus far has been anemic.

The problem could be seen in the bags of cash heaved into the Liquor 
Control Board's offices this month by marijuana merchants. Nearly 
one-third of the excise taxes were paid in cash. That's right, in cash.

That amounts now to a few hundreds of thousands of dollars. When the 
excise tax haul grows to hundreds of millions, as it is predicted, it 
will be open season for armed robbers, let alone tax evasion.

This is not a Washington state problem. More than one-third of 
Americans now live in medical-marijuana states, and the number is 
also growing rapidly. A measure on Florida's ballot this fall 
legalizing medical marijuana was backed by 88 percent of voters. 
Oregon and Washington, D.C., appear ready to join Washington and 
Colorado with full legalization regimes in November.

The federal Financial Crimes Enforcement Network (FinCEN) in February 
issued guidance for banks doing business with marijuana businesses, 
but it did little good. FinCEN director Jennifer Shasky Calvery 
disclosed that 105 U.S. financial institutions were now banking with 
marijuana businesses, which she declared a success, according to a 
copy of her speech given to American Banker magazine.

That is a premature victory lap. Before the February rules, 87 
financial institutions were doing marijuana business in Colorado 
alone, according to a FinCEN report in 2012. The feds' fix has done 
little good, because they did not remove enough of the risk for 
touching marijuana money.

"After a series of red lights, we expected this guidance to be a 
yellow one. This isn't close to that," said Colorado Bankers 
Association president Don Childears.

Colorado tried to address this with state regulation, but it also 
hasn't worked well, because of the interstate nature of banking. 
Washington hasn't tried.

A handful of local institutions, including Seattle-based Salal Credit 
Union, publicly said they would provide banking services to 
businesses licensed under Initiative 502. Helpful, but that alone 
does not make a functional banking system.

Bringing marijuana businesses into the federal mainstream is a 
federal issue. A bill sponsored by U.S. Rep. Denny Heck, D-Olympia, 
passed the House in July, but is sitting in the Senate.

The clock is ticking. Colorado has already seen armed robberies at 
its retail shops. Washington has not - yet.
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MAP posted-by: Jay Bergstrom