Friday, February 7, 2014
Of Marijuana and Money
The legalization of cultivating and selling marijuana, however, creates a number of financial and regulatory issues:
First, Federal laws forbid banks from allowing accounts where marijuana proceeds -even legal ones- would be deposited. Banks can face Federal racketeering charges. As a result, pot farmers and dispensaries deal almost completely in cash. Imagine paying your taxes -in cash. Imagine paying your employees -in cash. Imagine paying your vendors -all in cash. No bank will give you a loan to start your business. Where are you going to store the thousands of dollars your business brings in daily? Imagine the security concerns.
From the perspective of the business owners, the ban on banking even legal marijuana money is a huge headache -and a dangerous one with so much cash floating around.
States like Colorado and Washington see big tax dollars in recreational marijuana sales, but the banking problems also make the industry ripe for tax evasion.
The US Justice Department is currently working on new regulations that would open the way for banks to treat marijuana businesses that same as other legal businesses -in those states where marijuana has been legalized. Several members of Congress, however, have come out opposing the changes. 2014 will likely see a number of new issues and opportunities open for the marijuana industry.