WASHINGTON — Reforming the banking system for the cannabis industry would allow the U.S. to further tap into the $120 billion marijuana black market, an industry representative said last week after Sen. Jeff Merkley (D-Ore.) introduced legislation that would protect financial institutions dealing with cannabis companies.
Dr. Stuart Titus, CEO of Medical Marijuana Inc., said in an interview Friday that banking reform will allow regulators to better track revenue, will draw business from the black market and allow the federal government to realize millions of dollars in revenue. He described how legalization is transforming economies in places like Colorado, Washington state and Oregon.
Colorado collected more than $200 million in marijuana tax revenue for 2016, the Oregon Department of Revenue collected $65.4 million in marijuana tax payments the same year, and Washington projects $730 million in marijuana tax revenue for fiscal years 2018-19. The marijuana industry relies on cash transactions, as financial institutions are subject to federal charges for dealing with the marijuana industry and frequently deny business to cannabis dispensers.
Merkley’s bill would prevent federal banking regulators from prohibiting, penalizing or discouraging a bank from doing business with the cannabis industry, while also creating a “safe harbor” from criminal prosecution and liability for these banks. The congressman in a statement Wednesday said that forcing legal businesses to operate entirely in cash is an invitation for money laundering and robbery.
“It’s absurd that cannabis business owners in Oregon have to shuttle around gym bags full of cash to pay their taxes or compensate their employees,” Merkley said. “This is a public safety issue, and rather than making it even harder for banks to serve these legal businesses, President Trump and Attorney General Sessions should work with us to end this unnecessary risk for communities across America.”
Anti-legalization groups also sounded off this week in response to Merkley, claiming that the cannabis industry is already accepting credit card transactions. Jeff Zinsmeister, executive vice president for Smart Approaches to Marijuana, accused marijuana business of creating shell companies so that they can illegally take credit payments. He said in an interview Friday that he has been in contact with individuals who have gone into dispensaries in Colorado and purchased product using credit.
“Theoretically, they are cash businesses, but we have first-hand accounts. I’ve seen receipts from people who have made credit card purchases, obviously illegally I would assume, where the credit card transaction was made with an entity with a different name,” he said. “The precise term for that would be money laundering. I don’t like to use euphemisms for this kind of thing.”
He said Merkley’s legislation is an attempt to the open the floodgates to Wall Street investment in the cannabis industry, while also condemning politicians for taking donations from the illegal industry.
“Marijuana is illegal under federal law,” Zinsmeister said. “Why would we be extending protections to the banking sector to handle illegal money? Money that’s illegal federally seems to be a bit of putting the cart before the horse. We wouldn’t do that for any other illegal business – why would we do it for marijuana?”
Scott Chipman, Southern California chairman for Citizens Against Legalizing Marijuana, wrote in an email Friday that his group is most concerned about the impact marijuana has on young, developing minds. Issues he listed included addiction, amotivational syndrome, psychotic breaks and schizophrenia, in-utero fetal tumors, lower birth weights of babies born to users and IQ loss, among others.
“Any legislation that attempts to legitimize drug dealing is dangerous and counterproductive to addressing and reversing the current trends of using drugs to achieve an altered state of mind and the mental and physical impairment that results from psychotropic drug use,” he said in a statement. “The legislators who would support this are pandering to illicit drug dealers and are ignoring public health and safety, which should be their number one priority.”
Pro-legalization groups, in contrast, have touted marijuana’s health benefits, citing successful treatment for epilepsy, glaucoma, seizures, cancer, anxiety, depression and muscle spasms.