Pubdate: Wed, 07 Feb 2018
Source: Charlotte Observer (NC)
Copyright: 2018 The Charlotte Observer
Author: Stuart Leavenworth


Stung by robberies in California, Colorado, Washington and other
states, the cannabis industry is pressing Congress to change federal
banking laws so that its retailers no longer have to carry and process
large amounts of cash.

Yet lacking the lobbying muscle of their adversaries, the industry
hasn't gained much traction on Capitol Hill, leaving cannabis business
owners and their employees vulnerable to thefts and violent crime.

GOP lawmakers from pot-unfriendly states have sidelined legislation in
the House and Senate that would allow marijuana businesses to conduct
transactions with federally regulated banks. These also include state
and community owned banks that are part of the Federal Reserve System.

In another blow for the industry, Attorney General Jeff Sessions last
month made it easier for federal prosecutors to enforce federal
marijuana laws in states that had legalized the drug. The announcement
caused stock prices for pot companies to plunge, and prompted many
financial institutions to become even more wary of conducting business
with marijuana enterprises.

Michael Correia, a lobbyist for the National Cannabis Industry
Association, said there are strong law-and-order arguments for
allowing marijuana businesses to bank like others do. They'd no longer
need to conduct transactions in cash, including paying employees,
could more easily pay their taxes and could separate themselves from
the illicit marijuana market, he said.

But according to Correia, the GOP leadership in Congress has shown no
interest in even holding hearings on the SAFE Banking Act, legislation
that would free banks to conduct business with state-approved
marijuana growers and retailers.

"It is very frustrating," said Correia, who previously worked for U.S.
Rep. George Radanovich, a California Republican who retired in 2010.
"The leadership of Republican Party are old school people and do not
support this legislation. We haven't gotten any movement to this point."

For the cannabis industry and states that have legalized marijuana,
the stakes are considerable. Cannabis businesses generate about $8
billion in annual revenues, a figure that is projected to reach $24
billion by 2025, according to New Frontier Data, a D.C.-based
analytics company that monitors the industry. An estimated 70 percent
of cannabis businesses have no relationship with a financial
institution and thus use cash for all transactions, including salaries
for employees.

All those greenbacks are potent targets for criminals. Last month, a
pair of thieves beat and robbed a courier carrying $9,000 in cash from
San Diego marijuana businesses. In Washington state, police have
reported multiple robberies, including one in September when a
marijuana shop employee was shot and injured by thieves.

In Aurora, Colorado, police are still looking for two assailants in
connection with the killing of a Marine veteran during a marijuana
dispensary robbery in 2016. The Marine veteran, Travis Mason, worked
as a security guard at the dispensary and died of a gunshot wound to
his head.

Marijuana proponents say a change in federal banking laws would
protect public safety, but opponents are pressing members of Congress
to reject the SAFE Banking Act.

"This chaos is all so predictable," said Carla Lowe, founder of
Citizens Against Legalizing Marijuana, one of the groups that fought
the 2016 passage of Proposition 64, California's legalization
initiative. "This industry is a lawless industry...All of their money
is illegal, and it should stay illegal."

The cannabis industry's reliance on cash is also complicating tax
collection efforts. In California, Proposition 64 was sold to voters
with the projection it could generate more than $1 billion yearly in
state and local tax revenues.

Yet for government agencies, it is harder to track sales from all-cash
businesses than it is for those who rely on credit cards, and it
becomes tougher still when those businesses can't use banks. To pay
their taxes in Sacramento, some 30 city-approved marijuana shops have
to stuff cash into backpacks and duffel bags and haul it to a set
location each month, kept secret for security reasons.

"It is a far-from-ideal setup," said Joe Devlin, Sacramento's chief of
cannabis policy and enforcement. "When someone comes in to pay a
parking ticket in cash, that is one thing. When someone is coming in
paying $30,000 in taxes, it is something else."

Over the last decade, the cannabis industry has devoted much of its
political spending toward passage of state legalization and medical
marijuana laws. It helped raise $25 million in support of passing
Proposition 64, compared to only about $2 million raised by opponents.

Inside the D.C. beltway, the money influence is reversed. Opponents of
marijuana legalization -- such as the National Fraternal Order of
Police and other law enforcement groups -- spend millions of dollars
each year on lobbying and campaign contributions, far more than
pro-cannabis groups, such as the National Organization for the Reform
of Marijuana Laws.

One of the most powerful opponents of marijuana legalization is casino
magnate Sheldon Adelson, who has spent more than $190 million since
1989 on contributions to presidential candidates and members of
Congress, nearly all of them Republicans, according to the Center for
Responsive Politics.

The industry is working hard to enhance its clout in Washington, but
it hasn't been easy, said Khurshid Khoja, a California lawyer who
represents numerous cannabis businesses.

"It's only in the last few years we haven't been treated like a joke,"
said Khoja, founder of Greenbridge Corporate Counsel. During past
lobbying days at the Capitol, he said, cannabis industry advocates
could only meet with staffers in the hallways, and routinely had to
endure quips about being the "stoner" lobbyists.

"Last year we actually got to meet with members of Congress," said
Khoja. "It's an indication of the progress we have made."

The industry can count some GOP friends in Congress, including Matt
Gaetz from Florida, Dana Rohrabacher from California and Virginia's
Tom Garrett, who introduced legislation this year to decriminalize
marijuana. Another key Republican is Sen. Cory Gardner of Colorado,
who opposed his state's 2012 legalization of marijuana but has
criticized Jeff Session's January directive to U.S. attorneys. For the
last month, Gardner has retaliated against Sessions by blocking
appointments to the Department of Justice.

John Kagia, an executive vice president with New Frontier Data, said
he expects other lawmakers to challenge the Trump administration if it
attempts to interfere with marijuana laws in their states. "The Trump
administration is forcing the issue in ways we haven't seen in a
while," he said.

For the SAFE Banking Act to be enacted, however, it would have to get
through the House and Senate banking committees. Both are chaired by
opponents of marijuana legalization -- Rep. Jeb Hensarling of Texas
and Sen. Mike Crapo of Idaho. Advocates see little hope the
legislation will go anywhere this year, and are examining

California is one state that is studying creation of a public bank to
serve the marijuana industry. But the proposal faces numerous hurdles,
including a potential start-up subsidy that the state treasury and
taxpayers would have to bear.

The 2018 mid-term elections could boost the prospects for federal
banking reform. Hensarling is not running for reelection, meaning
there will be a new chair of the House Financial Services Committee.
There's also a chance that Republicans could lose their majorities in
one or both chambers of Congress.

"Democrats have proven to be far more friendly to reform efforts and
ending prohibition," said Khoja.
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MAP posted-by: Matt