As crazy as it seems, there's a financial issue on the federal level that has been cause for alarm in the legalized marijuana industry. Note: I said legalized. By that I refer to transactions for medical marijuana purchases (in 20 states plus D.C.) and legal recreational buys in Colorado and soon Washington state. You see, because of archaic federal laws making cannabis a Schedule One drug, purchases are illegal by federal standards despite being legal in a number of states for varying purposes.
So if it's legal in some states, what's the problem with banking?
Simple. Banks are currently barred under federal banking regulations from handling proceeds from marijuana sales even in states where pot sales have been made legal. Banks are also prohibited from doing other banking business with these vendors like loans and investments. Simply put, that means vendors can't deposit their "state legal" revenues in banks.
That trickles down to the customers who are mandated to cash only purchases -- no credit/debit cards. It also means employees have to be paid in cash as the vendors can't have checking accounts if their deposits were made from marijuana purchases. Loans and investments too are verboten for sellers who want to expand or improve their facility -- perhaps to add security measures to safeguard all of the cash-carrying customers.
Finally the Obama Administration Attorney General, Eric Holder, has seen the light -- and gotten at the very least, a nod from the POTUS to take steps which will help guarantee taxes being paid on these purchases -- a gray area in the state legal system but felonious on the federal level. That's right -- Colorado could tax your purchase, but wasn't allowed to pay federal taxes on the money. They would have to send cash via pony express or Wells Fargo Wagon to deliver the tax revenues as the money couldn't be wired. The result was no federal revenues were collected.
Money talks. Especially federal tax revenues.
As reported today on the HuffPo:
Jan 23 (Reuters) - U.S. treasury and law enforcement agencies will soon issue regulations opening banking services to state-sanctioned marijuana businesses even though cannabis remains classified as an illegal narcotic under federal law, Attorney General Eric Holder said on Thursday.
Finally, some common sense out of Washington. Let's face it, if states are fighting to legalize something that shouldn't have been criminalized in the first place (remember the Volstead Act), at least let them levy their taxes and be able to put them somewhere safer than in the mattresses. And lets send the applicable tax revenue to the IRS. If we can get cannabis tax receipts sent to Washington, maybe next we can do something about collecting those soft off-shore tax loophole revenues. Talk about putting a dent in the federal deficit.
This is a step in the right direction. It's late, but like many good things, better late than never.