Pubdate: Tue, 09 Sep 2014
Source: Boston Globe (MA)
Copyright: 2014 Globe Newspaper Company
Contact: http://services.bostonglobe.com/news/opeds/letter.aspx?id=6340
Website: http://bostonglobe.com/
Details: http://www.mapinc.org/media/52

MARIJUANA DISPENSARIES NEED ACCESS TO BANKING SYSTEM

Nearly two years after Massachusetts voters approved medical 
marijuana, nine distribution centers are to open next year in places 
like Brookline, Lowell, Salem, and Quincy. The state licensing 
process for these dispensaries has been convoluted. And yet that path 
seems easy to navigate compared with the latest obstacle: the banking 
system. Because the drug remains illegal under federal law, 
marijuana-related businesses nationwide have struggled to find banks 
that will accept their deposits.

This is creating a bizarre and dangerous cash management situation 
for businesses that Massachusetts and other states treat as legal.

Federal lawmakers and regulators should acknowledge this and allow 
marijuana dispensaries to use the banking system safely.

Nationwide, legal marijuana sales are expected to reach about $2.6 
billion this year. In February, the Obama administration announced 
new guidelines for banks to legally do business with state-regulated 
marijuana merchants.

But the action doesn't prevent federal authorities from prosecuting 
or otherwise penalizing those banks.

Not surprisingly, banks are still leery of serving the on-the-books 
marijuana industry.

Recently, it was reported that only 105 banks and credit unions - 1 
percent of the total nationwide - provide banking services to 
marijuana dispensaries, according to a top federal official.

The issue is most acute in Washington and Colorado, the only states 
to allow sales of recreational marijuana.

But three-quarters of Americans now live in states with marijuana 
laws more lenient than the federal government's. Thirty-five states 
and the District of Columbia allow some form of medical marijuana.

In November, Alaska and Oregon voters will decide whether to legalize 
recreational marijuana.

In light of a shift in public sentiment, it's worrisome to hear of 
marijuana business operators having to hide tens of thousands of 
dollars in cash in offices and carry it around in paper bags because 
banks refuse to take their money.

The cash stockpiling has created unintended consequences: New 
security businesses have sprung up to protect the cash that marijuana 
merchants are forced to transport.

A Seattle marijuana businessman told The New York Times: "We have to 
play this never-ending shell game of different cars, different 
routes, different dates, and different times." Meanwhile, owners of 
marijuana stores have to pay tens of thousands of dollars in state 
taxes using cash. Even more puzzling: Legal marijuana businesses 
without bank accounts are charged a 10 percent penalty by the IRS for 
paying payroll taxes in cash.

Congress seems to be doing something about the problem.

This summer, the US House approved a bipartisan amendment that allows 
banks to accept deposits from marijuana stores and dispensaries. The 
bill prevents the Treasury Department from penalizing financial 
institutions that provide services to marijuana businesses that are 
legal under state law. The Senate should quickly pass it so that 
marijuana businesses can at least begin to apply for the banking 
services they need.
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MAP posted-by: Jay Bergstrom