Tag Archives: banking industry

Marijuana Banking Measure Rejected By Congressional Committee

Tom Angell , Contributor

A powerful congressional committee voted on Wednesday to reject a measure to protect banks that open accounts for marijuana businesses from being punished by federal financial regulators. Supporters then scrambled to craft a more limited measure focused on medical cannabis businesses, but it was ultimately withdrawn before a vote could take place.

PHOTO: TOM SYDOW

PHOTO: TOM SYDOW

The broader measure would have prevented the U.S. Department of Treasury from taking any action to “penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, producer, or a person that participates in any business or organized activity that involves handling marijuana or marijuana products” in accordance with state or local law.

After a lengthy and impassioned debate during which at least 19 lawmakers spoke, it was defeated on a voice vote by the House Appropriations Committee.

Despite the fact that a growing number of states are legalizing marijuana for recreational or medical use, many financial institutions have remained reluctant to work with cannabis businesses for fear of running afoul of money laundering laws under ongoing federal prohibition.

As a result, many marijuana growers, processors and retailers operate on a cash-only basis, which can make them targets for robberies.

The issue is “not whether or not one approves of marijuana,” said Rep. David Joyce (R-OH), the chief sponsor of both banking amendments, before the vote. “This is about public safety and financial transparency.”

Either rider, if it were successfully attached to legislation to fund the Treasury Department for Fiscal Year 2019, would have provided added assurance to banks that federal officials won’t close them down for working with the cannabis industry.

A similar measure was approved by the full House of Representatives in 2014 by a margin of 231 to 192, but was not included in final spending legislation that year, and congressional Republicans have since blocked floor votes on most cannabis measures.

In the lead up to the Wednesday banking vote, several advocates and Capitol Hill staffers expressed confidence in interviews that the measure would pass. But a number of likely Republican supporters were absent during the debate, and others who are sympathetic to marijuana law reform expressed varying concerns about the specific proposal. As a result, supporters did not force a roll call tally following the defeat on a voice voice.

Joyce then went back to the drawing board and crafted the narrower medical-focused amendment, which he hoped would find enough support to pass. But after a brief debate on the second proposal, Chairman Rodney Frelinghuysen (R-NJ) asked Joyce three times to withdraw the amendment instead of forcing a vote. The Ohio congressman twice pressed ahead and said he wanted the committee to weigh in on the measure, only to give in at the last moment and pull the measure.

By seeking to adopt the language in the appropriations panel, before the overall spending bill heads to the Rules Committee, which is where marijuana amendments have gone to die for the past several years, advocates were attempting to circumvent an effective blockade that has prevented progress on cannabis reform in the House.

In a similar move last month, the Appropriations Committee approved a measure to protect state medical cannabis laws from Justice Department interference following several instances of that measure being blocked by the Rules Committee.

In a separate sign of the mainstreaming of marijuana politics on the other side of the Capitol, on Wednesday the Senate Appropriations Subcommittee on Commerce, Justice, Science and Related Agencies included that far-reaching medical marijuana language in the initial version of the Justice Department funding bill as introduced by Republican leaders, meaning that no vote or amendment will even be necessary to advance the provision in that chamber this year.

The Senate panel is scheduled to take up its version of the Treasury Department funding bill, which is called the Financial Services and General Government Appropriations Act, next week.

The Fraternal Order of Police, which opposes legalization, sent a letter this week urging House lawmakers to reject the cannabis banking move.

Letter to @USRepRodney & @NitaLowey advising them of our strong opposition to any amendment that would allow the marijuana industry full access to the American banking system. Drug cartels will be given the opportunity to launder money under the guise of marijuana normalization pic.twitter.com/y5a0gHPIUi

— National FOP (@GLFOP) June 12, 2018

PLEASE CONTINUE READING…

Advertisements

Marijuana firms in cloudy haze over banking woes

(Reuters) – Zach Lazarus, chief executive officer of A Green Alternative, a marijuana dispensary in San Diego, California, has lost count every time he re-opened a bank account after it was closed because of his connection to the cannabis industry.

Lazarus has had to play a game of “whack-a-mole” with banks, likening his frustrations to a popular arcade game in which a player repeatedly gets rid of something only to have it re-appear somewhere else.

“We have had Chase Manhattan and Wells Fargo shut us down … my wife’s personal bank accounts and credit cards have been shut down as well, all because I‘m in the cannabis industry,” he says.

Lazarus and other marijuana business owners in the $8 billion industry resort to cash-only transactions for business and to pay employees because they cannot get access to banks.

Despite making legal inroads in the United States, with California the latest state to legalize marijuana for recreational use starting Jan. 1, owners still feel the pinch.

The main problem is the classification of marijuana as a Schedule I controlled substance by the U.S. Food and Drug Administration, alongside heroin, LSD, and ecstasy – making it almost impossible to get banking services.

Banks are governed by federal laws and doing business or extending services to the firms means tougher scrutiny, often at significant costs, as banks have to do their own due diligence to prove transactions are legal.

They are required to prove that the firms are not selling to minors, funding crime groups, and not using the pretext of selling marijuana to push illegal drugs among other things.

A poll conducted by industry publication Marijuana Business Daily in 2015 showed 60 percent of the companies operating in the cannabis industry reported not even having a basic bank account.

UNDERGROUND ECONOMY

The void makes it hard for cannabis companies to conduct basic financial transactions such as deposit money, receive federal insurance or pay taxes.

“Most marijuana companies have a courier service, or a Brinks truck, or a big wheelbarrow full of cash that they send to the Internal Revenue Service to pay their taxes,” says Stuart Titus, CEO of California-based Medical Marijuana Inc (MJNA.PK).

With an estimated 165,000 to 230,000 full and part-time workers, according to Marijuana Business Daily, many marijuana business owners pay their employees in cash. bit.ly/2nQBeYw

“It is basically a kind of underground, cash-based economy,” said Titus.

Sapphire Blackwood, director of public affairs for the Association of Cannabis professionals, says she got paid in cash at her last firm, a San Diego-based cannabis consulting company.

“Because I get paid in cash, and even though I did no illegal activity, I’ve had to deposit so much cash every week and every so often … I felt like I was being stared at by the banks. It’s frightening,” she said.

Blackwood’s current firm also had banking problems. All the deposit accounts were closed because the word “cannabis” was in the name of the company, she said.

SHADY WORKAROUNDS

Workarounds exist but most are borderline unethical.

Medical Marijuana Inc0.17923

MJNA.PKOTC Markets Group – (Current Information)

+0.02(+15.48%)

MJNA.PK

  • MJNA.PK

A widely-used practice is to create a shell or a holding company whose operations are acceptable to banks, and conduct financial transactions through the holding company.

“In many states that have legalized cannabis, pot companies deposit cash under a different description,” says Tim McGraw, CEO of Canna-Hub, a California-based real estate development and property management company for the cannabis industry.

“A lot of operators set up accounts as real estate management companies or call themselves ‘medical marijuana’ companies when they are anything but,” McGraw added.

Others use personal bank accounts to deposit cash earned from the sale of products, wire payments to employees and pay companies.

However, California’s state treasurer John Chiang wants the state to consider creating a public/government-owned bank that could serve cannabis companies.

Chiang’s office formed a group made up of representatives from law enforcement agencies, banks, taxing authorities, local government and the cannabis industry.

It held several meetings with owners to discuss ways to alleviate banking challenges and make information more available to banks for better transparency.

Talks have also begun to form a multi-state group to lobby Congress to ease federal regulations for marijuana companies and remove the Schedule I drug classification.

But it will be an uphill battle. In November, Attorney General Jeff Sessions at a congressional hearing said former President Barack Obama-era guidelines on cannabis will remain, meaning even though a state can legalize marijuana, it will continue to be illegal on the federal level.

To view a graphic on Legalization legislation jpg, click on this link: tmsnrt.rs/2AC91Hk

Reporting By Aparajita Saxena in Bengaluru; Editing by Bernard Orr

CONTINUE READING…

Congressman Heck Introduces Marijuana Banking Amendments

by NORML September 2, 2017

Congressman Denny Heck (WA-10) with Representatives Perlmutter (CO-07), Lee (CA-13), and Titus (NV-01) have submitted two amendments to the financial services division to be included in the House appropriations bill. Both of these amendments focus on banking services for legal marijuana-related businesses and would be a temporary fix until the current legislation, the SAFE Banking Act, is passed into law.

The first amendment prohibits any funds in the bill from being used to punish banks for serving marijuana businesses that are legal under state law. The second amendment prohibits the Treasury from altering FinCEN’s guidance to financial institutions on providing banking services to legitimate marijuana businesses. These amendments, if included, would allow for legal marijuana-related business to operate according to state laws and enjoy access to the banking system.

Currently, hundreds of licensed and regulated businesses do not have access to the banking industry and are unable to accept credit cards, deposit revenues, or write checks to meet payroll or pay taxes. This situation is untenable. No industry can operate safely, transparently, or effectively without access to banks or other financial institutions.

Eight states and the District of Columbia have legalized adult use of marijuana and more than half the states have implemented medical marijuana laws, so it is both sensible and necessary to include these proposed amendments so that these growing number of state-compliant businesses, and their consumers, may operate in a manner that is similar to other legal commercial entities.

You can click here to send an email in support of the SAFE Banking Act to your federal elected officials now.

CONTINUE READING…

Pot Was Flying Off the Shelves in Uruguay. Then U.S. Banks Weighed In.


Pot Was Flying Off the Shelves in Uruguay. Then U.S. Banks Weighed In.

By ERNESTO LONDOÑOAUG. 25, 2017

A line outside a pharmacy selling legal marijuana last month in Montevideo, Uruguay. Credit Matilde Campodonico/Associated Press

The pharmacies selling pot were doing a brisk business.

After Uruguay became the first country in the world to fully legalize marijuana sales for recreational use last month, some of the pharmacies struggled to keep up with the demand.

Then came the stern letters from American banks.

The letters immediately sent officials in Uruguay scrambling to make sense of the Patriot Act and other American laws that could doom an essential part of their country’s new marijuana market.

American banks, including Bank of America, said that they would stop doing business with banks in Uruguay that provide services for those state-controlled sales.

Afraid of losing access to the American banking system, Uruguayan banks warned some of the pharmacies over the last couple of weeks that their accounts would be shut down, potentially signaling a broader international impasse as other countries, including Canada, set out to legalize marijuana.

“We can’t hold out false hope,” President Tabaré Vázquez of Uruguay told reporters this week, adding that his administration was trying to come up with a solution.

Uruguay’s Marijuana Law Turns Pharmacists Into Dealers JULY 19, 2017

The snag mirrors challenges that such businesses have faced in American states that have legalized medical and recreational cannabis. Under the Patriot Act, which was passed weeks after the attacks of Sept. 11, 2001, it is unlawful for American financial institutions to do business with dealers of certain controlled substances, including marijuana. The provisions were designed to curb money laundering and drug trafficking.

American banks, including Bank of America, said they would stop doing business with banks in Uruguay that provide services for the country’s state-controlled marijuana sales. Credit Spencer Platt/Getty Images

The Obama administration indicated in 2014 that banks were unlikely to face penalties for offering services to marijuana businesses in states where the trade is legal, as long they screened accounts for signs of money laundering and ensured that customers followed state guidelines. This enabled some of the businesses to get accounts at credit unions, but major banks have largely stayed away from the expanding industry, concluding that the burdens and risks of doing business with marijuana sellers were not worth the hassle.

“Banks are businesses, and they can pick and choose who they do business with,” said Frank Robison, a lawyer in Colorado who specializes in marijuana regulation. “From a banking industry perspective, the marijuana industry might be perceived as a flea on a dog’s back.”

Several pot businesses in states like Colorado and Washington — the first to legalize recreational marijuana — have opted to remain cash-only businesses. Others have found small banks willing to take a calculated risk.

But finding a workaround in Uruguay may be hard. Sales of marijuana represent a small share of business for pharmacies, which are currently the only merchants licensed to sell it, and the pharmacies say they need banking services to operate.

Similarly, bankers in Uruguay will probably find it much more important to remain in good standing with American financial institutions than to preserve the accounts of a small number of pharmacies.

The threat of losing their bank accounts has led some of the roughly 15 pharmacies that initially signed up to participate in the new market to give up on marijuana sales, said Pablo Durán, a legal expert at the Center of Pharmacies in Uruguay, a trade group. Twenty other pharmacies that were expected to join the market are holding off while the government explores solutions, he said.

The American regulations are counterproductive, supporters of the legal market in Uruguay contend, because they may inadvertently encourage, not prevent, illicit drug sales.

Fighting drug trafficking was one of the main reasons the Uruguayan government gave for legalizing recreational marijuana. Officials spent years developing a complex regulatory framework that permits people to grow a limited supply of cannabis themselves or buy it at pharmacies for less than the black market rate. Lawmakers hoped that legal structure would undercut illicit marijuana cultivation and sales.

“There probably isn’t a trade in Uruguay today that is more controlled than cannabis sale,” Mr. Durán said.

As a candidate, President Trump said that American states should be free to chart their own courses on marijuana, and he promised to pare back regulation in the financial sector. Attorney General Jeff Sessions, however, has been a sharp critic of legalization and has compared marijuana to heroin.

Now, some members of the cannabis industry wonder whether the United States government will resolve the conflict between its banking laws and the expanding patchwork of measures to legalize recreational and medical marijuana use around the world. The guidance from the Obama administration, issued by the Justice and Treasury Departments in a pair of memos in 2014, addressed the matter domestically but not for international banking.

“Uruguay may be the tip of the iceberg,” said Mr. Robison, the Colorado lawyer who specializes in marijuana regulation.

Pharmacists in Uruguay were incredulous to learn that their bank accounts could be shut down, considering the years of study and planning that preceded the start of retail marijuana sales last month. The country’s marijuana law was passed in 2013.

“We can’t understand how the government didn’t have the foresight to anticipate this,” said Gabriel Bachini, a pharmacy owner in the coastal city of Colonia.

Buying marijuana in a pharmacy in Montevideo. Credit Andres Stapff/Reuters

Since sales began, the number of registered buyers in Uruguay has more than doubled. As of Aug. 15, more than 12,500 people had enrolled in a system that verifies customers’ identities with fingerprint scanners and allows them to buy up to 40 grams per month (at a price of about $13 for 10 grams, enough for about 15 joints, advocates say). Under the law, only Uruguayan citizens and legal permanent residents are allowed to buy or grow marijuana.

“Demand has been very strong,” Mr. Bachini said. “People are thrilled that they no longer have to go to private homes or venture out into neighborhoods” to get marijuana.

In emailed statements, the Treasury and Justice Departments said that their earlier guidance was still being applied. But banking and legal experts say the Trump administration has yet to lay down clear markers on this area of policy.

Officials in Uruguay are hopeful that American lawmakers will pass legislation allowing banks to do business with marijuana sellers in states and countries where it is regulated. Representative Ed Perlmutter, Democrat of Colorado, introduced a bill in April that would do that, but marijuana advocates say they do not expect a prompt legislative change.

“It is ironic that laws aimed at fighting drug trafficking and money laundering have created a roadblock for a system that intends to do just that,” said Hannah Hetzer, an analyst at the Drug Policy Alliance, which supports decriminalization of marijuana. “Uruguay is creating a legal market that displaces the illicit marijuana market.”

Mr. Bachini, the pharmacist, said he had not yet heard from his bank. But if it threatens to shut down his account, he said, he will not think twice about giving up marijuana sales.

“This pharmacy has been around for 30 years,” he said. “I’d just stop until this issue with the United States is resolved.”

Correction: August 26, 2017

An earlier version of this article misidentified the state that Ed Perlmutter represents in the House. It is Colorado, not Oregon.

Mauricio Rabuffetti contributed reporting.

A version of this article appears in print on August 26, 2017, on Page A1 of the New York edition with the headline: Uruguay’s Legal Pot Is Imperiled by U.S. Banks. Order Reprints| Today’s Paper|Subscribe

Continue reading the main story


Marijuana cash is problem for Illinois tax collection

Updated: Jun 19, 2015 10:22 AM CST

CHICAGO (Associated Press) – The state of Illinois is having trouble finding a bank or financial company to process the large amounts of cash it anticipates receiving for taxes and fees from its new medical marijuana industry.

The state received no response to a solicitation published last fall. Illinois State Treasurer Michael Frerichs has started a formal process to find out why.

The legal marijuana industry tends to operate with cash only. Experts say banks and credit card companies are wary because the federal government considers marijuana an illegal drug.

The Illinois treasurer is asking the financial industry for input by June 29. An armored car services requirement has been deleted from the new draft because it was "believed to be a deterrent to proposals."

Continue Reading…,

Legalized Marijuana: Companies Moving Now To Cash In On Cannabis

Largely illegal in the U.S. for a century, weed became legal in Washington and Colorado at the start of the year after voters in those states gave the go-ahead in 2012. Further north, voters could decide in August whether Alaska will become the third state to remove prohibitions on the recreational use of pot. A poll released Monday by Quinnipiac University suggests residents of New York, a state notorious for its strict drug laws, are in favor of legalizing small amounts of marijuana for personal use by a comfortable margin of 18 percentage points.

Estimates of the total value of a legal pot industry in the U.S. are hard to establish in part because the current price of marijuana is artificially high; illegal substances, after all, are a significant risk to black market dealers and buyers, and with that comes a premium. A 2011 report by See Change Strategy, which focuses on growth in new markets, estimated that the value of medical marijuana alone would grow from $1.7 billion to about $9 billion by 2016.

Here are some companies that have begun positioning themselves to cash in on this cash crop: CONTINUE THRU THIS LINK!

By Angelo Young on February 20 2014 10:59 AM

Marijuana Retailer

Above:  Nate Johnson, managing owner of the Queen Anne Cannabis Club, sells a marijuana strain called "Beast Mode OG", named after NFL player Marshawn "Beast Mode" Lynch of the Seattle Seahawks, in Seattle, Washington January 28, 2014. Reuters