Pubdate: Mon, 10 Aug 2015
Source: Press-Enterprise (Riverside, CA)
Copyright: 2015 The Press-Enterprise Company
Contact: http://www.pe.com/localnews/opinion/letters_form.html
Website: http://www.pe.com/
Details: http://www.mapinc.org/media/830

DON'T START A STATE-RUN BANK FOR POT BUSINESSES

It's a bummer for the state. Medical marijuana has been legal in 
California since voters passed Proposition 215 in 1996. But federal 
law still classifies pot as a Schedule I drug, which the U.S. Justice 
Department defines as having, "no currently accepted medical use in 
the United States." That means the national banking system is 
supposed to be off-limits to medical marijuana dispensaries, which 
have to pay their state taxes in cash.

According to the Sacramento Bee, Board of Equalization Member George 
Runner "said a recent tax delivery to his district office in 
Sacramento involved about $200,000 in cash." That makes such couriers 
easy marks for robbery.

To get around that problem, BOE Member Fiona Ma is proposing a 
state-run bank, as described by CBS News San Francisco, "where 
cannabis businesses could make cash deposits and electronic transfers 
to the Tax Board. ... Ma says not only is the cash-only system 
dangerous, it's also hurting state coffers. California is losing out 
on millions of dollars in sales tax." No U.S. state has such a bank.

We are sympathetic to the dilemma of legal businesses forced by 
misguided federal policy to rely on cash, but this notion of a 
government bank for marijuana sellers should be snuffed out. For one 
thing, the issue is moving rapidly. Four states and the District of 
Columbia recently legalized marijuana not just for medical use, but 
for recreational use. At least five more states, including 
California, could do so by initiative in 2016.

The industry in 25 states also has been examined by Dynamic 
Securities Analytics. "One thing is clear: A wide swath of financial 
institutions in both [legal and illegal marijuana] states are having 
to deal with the reality of the fast growing legal marijuana 
industry," DSA found. "While we do not yet have a complete picture, 
the available data suggests a slight opening of financial services 
to" marijuana-related businesses.

Any California banking legislation would have to be introduced in 
2016 at the earliest, and quickly could be overcome by events.

We also worry that this could become a precedent, with state-run 
banks set up for other political purposes. This is not the time to 
grow a new bureaucracy.
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MAP posted-by: Jay Bergstrom