Got bank? Elec­tion could cre­ate flood of mar­i­juana cash with no place to go

Kuwait Times - - HEALTH & SCIENCE -


Although the sale of mar­i­juana is a fed­eral crime, the num­ber of US banks work­ing with pot busi­nesses, now sanc­tioned in many states, is grow­ing, up 45 per­cent in the last year alone. Still, mar­i­juana mer­chants say there are not nearly enough banks willing to take their cash. So many dis­pen­saries re­sort to stash­ing cash in stor­age units, back of­fices and ar­mored vans. Pro­po­nents be­lieve the Nov 8 elec­tion could tip the bal­ance in fa­vor of lib­er­al­iz­ing fed­eral mar­i­juana laws, a move seen as key to get­ting risk-averse banks off the side­lines. Mea­sures on bal­lots in Cal­i­for­nia, Florida and seven other states would bring to 34 the num­ber of states sanc­tion­ing pot for med­i­cal or recre­ational use, or both. That could push an­nual sales, by one es­ti­mate, to $23 bil­lion.

The prospect for a mar­ket of such scale is adding ur­gency to calls for a na­tional ap­proach to mar­i­juana that ex­pands bank­ing op­tions. Law en­force­ment and Fed­eral Re­serve of­fi­cials have ex­pressed con­cern about the fraud and crime as­so­ci­ated with un-bank­able cash. Nearly 600 dis­pen­sary rob­beries have been re­ported in Den­ver since recre­ational pot was le­gal­ized in Colorado three years ago. “There’s not a sin­gle hu­man be­ing who thinks there is any ben­e­fit at all in forc­ing mar­i­juana busi­ness to be con­ducted on an all-cash ba­sis,” said Rep. Earl Blu­me­nauer, a Demo­crat from Ore­gon who has called for the de­crim­i­nal­iza­tion of mar­i­juana since com­ing to Congress in 1996.

Money laun­der­ing

The US Jus­tice Depart­ment said in 2014 it would not pros­e­cute banks for serv­ing state-sanc­tioned mar­i­juana busi­nesses. At the same time, the Trea­sury Depart­ment re­quires banks to re­port sus­pected drug crimes. At last count, 301 banks were serv­ing mar­i­juana busi­nesses, ac­cord­ing to the Trea­sury Depart­ment. Many more have avoided the sec­tor out of fear that mak­ing the wrong call could put them at risk, said Robert Rowe, a vice pres­i­dent at the Amer­i­can Bankers As­so­ci­a­tion. The Na­tional Cannabis As­so­ci­a­tion is press­ing Congress for a law that would hold banks harm­less for han­dling pot cash, said Michael Cor­reia, a lob­by­ist for the trade group. If Cal­i­for­nia le­gal­izes recre­ational use next week, the na­tion’s big­gest Con­gres­sional del­e­ga­tion will have a big stake in the is­sue.

In lieu of fed­eral ac­tion, some states have tried their own fixes. Colorado cre­ated a credit union sys­tem for state-sanc­tioned mar­i­juana busi­nesses. But it fell apart when the Kansas City Fed­eral Re­serve de­nied a Colorado pot credit union ac­cess to the na­tional pay­ments sys­tem, which dis­trib­utes cur­rency and clears checks and elec­tronic pay­ments. Cal­i­for­nia has no such plans, said Tom Dress­lar, spokesman for the state’s Depart­ment of Busi­ness Oversight. “This was a prob­lem cre­ated by fed­eral law,” Dress­lar said, “and it needs a fed­eral so­lu­tion.”

In north­ern Cal­i­for­nia, where grow­ers serve state-sanc­tioned med­i­cal dis­pen­saries as well as the black mar­ket, the Com­mu­nity Credit Union of South­ern Hum­boldt stopped open­ing pot busi­ness ac­counts be­cause of the red tape and un­cer­tainty, said se­nior vice pres­i­dent Janet Sanchez. “We’re not be­ing asked to go over to the gun dealer and ask them if they’re mak­ing ap­pro­pri­ate back­ground checks,” she said. Dis­pen­sary op­er­a­tors un­able to find willing banks tell tales of sub­terfuge, record­keep­ing night­mares and armies of se­cu­rity guards. Many open bank ac­counts and sub­mit credit card charges in ways that ob­scure their true en­ter­prise, such as “spa ser­vices.”

Su­sana de la Rionda has run a Los An­ge­les med­i­cal mar­i­juana dis­pen­sary for 12 years and has had to find a new bank about once a year and sub­mit to tax au­dits twice as of­ten. “I feel like a gang­ster,” she said. Den­ver Re­lief dis­pen­sary founder Ean Seeb said op­er­a­tors al­ways are try­ing work­arounds to get cash into banks, in­clud­ing wash­ing bills in fab­ric soft­ener to hide the odor of pot. For a time, he said, one au­to­mated teller ma­chine near a Den­ver mall drew lines ev­ery night of mar­i­juana mer­chants, each de­posit­ing the max­i­mum $500 in cash.

Weed­ing out risk

Part­ner Colorado Credit Union be­gan work­ing with state-sanc­tioned dis­pen­saries two years ago and has de­vel­oped elab­o­rate pro­to­cols to min­i­mize risk, in­clud­ing an ini­tial vet­ting that can take three weeks. It uses ar­mored trucks to take cash de­posits di­rectly from dis­pen­saries to the Den­ver branch of the Fed­eral Re­serve Bank. When the credit union spots a red flag, Chief Ex­ec­u­tive Sundie Seefried dis­patches em­ploy­ees to pay the dis­pen­sary a visit, and she has closed two ac­counts for com­pli­ance prob­lems. Seefried en­cour­ages op­er­a­tors to visit by keep­ing fine cigars in her of­fice, and she stays in touch with reg­u­la­tors. “Our pro­gram is de­signed with eyes on the busi­ness, eyes on the owner, eyes on the money,” she said.

With 95 dis­pen­sary mem­bers, Seefried said the credit union is at ca­pac­ity, and she hopes more bankers will get in­volved. She fields calls for ad­vice, speaks to in­dus­try groups and, ear­lier this year, shared what she’s learned in a book. De­spite the safe­guards, Seefried said she takes noth­ing for granted. Ev­ery few months, she said she drills her staff to make sure they know what to do in the event of her ar­rest. “What calls are you go­ing to make?” she said she asks them. “If you don’t have a lit­tle fear go­ing into this be­cause of the il­le­gal­ity at the fed­eral level, you’re prob­a­bly not the per­son to do this job,” she said. —Reuters

MAINE: A mar­i­juana bud is seen at a med­i­cal mar­i­juana fa­cil­ity in Unity, Maine. —AP

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