Marijuana banking meeting raises hopes -- but can anything be done by January 1?
The inability of marijuana businesses to legally use banking services has been a problem in Colorado for years. But with recreational sales slated to start on January 1, the issue takes on even greater urgency -- hence, the noteworthiness of a closed-door meeting last week in Washington, D.C., involving a Treasury Department group.
Can a solution be found in the next couple of weeks? Hard to say -- but two local industry representatives underscore the importance of finding one.
As we reported in October, when Governor John Hickenlooper formally asked the feds to fix pot banking, dispensaries and other affiliated businesses are forbidden from using federally regulated banks because marijuana remains illegal under U.S. law. The substance falls under rules put in place to prevent money laundering by drug dealers, among others.
Nonetheless, apparent movement on the issue took a step forward during a September hearing at which Deputy Attorney General James Cole revealed that the Justice Department was working on a possible fix in conjunction with other agencies.
That was good news to the Denver Auditor's office, which had sent a letter in advance of the hearing arguing that forcing marijuana businesses to operate strictly on a cash basis created a range of problems.
"Anytime you do this much business in cash, it's a target for crime -- and it's pretty apparent that's been going on here over the last couple of years," maintained Denis Berckefeldt, director of communication for Denver Auditor Dennis Gallagher, in an interview with Westword. "And you can't account for this money. How much have you sold? Are you paying the taxes you're supposed to be paying? How much is hidden? If you don't have a paper trail, you can't track it, and all the seed-to-sale systems in the world won't solve the problem."
Such concerns are heightened by the expectation of a dozen recreational marijuana shops opening on January 1. Moreover, demand is thought to be so strong that some shops are worried about running out of product shortly thereafter.
No wonder local marijuana industry figures were so interested in the aforementioned meeting last Thursday. As reported by Philly.com, the sit-down involved the Bank Secrecy Act Advisory Group, a panel that specializes in topics related to money laundering. And while there were no announcements afterward about conclusions or possible actions, Michael Elliott, executive director of the Medical Marijuana Industry Group, hopes members understand that dragging their feet isn't an option. In a statement provided to Westword, he writes:
A lack of banking services creates major public safety and accountability problems. As the marijuana businesses begin catering to the full 21-and-up population in Colorado, these problems will be magnified. While we in Colorado will do everything we can to address this issue on a state and local level, this problem needs to be fixed at the federal level. A lack of a federal solution will lead to increases in the worst sort of crimes. We hope the federal government resolves the banking issue quickly; the safety of Colorado citizens depends on it.
Without access to basic banking services, many legitimate cannabis businesses are forced to manage sales, payroll, and even tax bills entirely in cash. That puts their customers, employees, and fellow community members at completely unnecessary risk. Everyone agrees that the situation is untenable; the Treasury Department and the Department of Justice must act and act quickly. The tide of public opinion is turning ever more quickly in support of regulated marijuana markets and, in 2014, at least six states will be implementing new regulations for these markets. It is long past time for the federal government to stop putting citizens in harms way by denying legally recognized businesses access to secure banking services.Even so, the odds of the matter being resolved by January 1 are long. Although Congress doesn't have to approve this regulatory tweak, its complexities, and the upcoming holiday season, will make rapid implementation challenging. As such, there's likely to be a lot of cash changing hands in a few weeks.
Here's the October letter requesting banking changes; it's signed by Hickenlooper and Washington Governor Jay Inslee.
Send your story tips to the author, Michael Roberts.
More from our Marijuana archive circa October: "Marijuana: John Hickenlooper asks feds to fix pot banking."