Five U.S. Senators who represent states that have legalized recreational use of marijuana have introduced legislation to make it easier for pot-selling businesses to obtain banking services.
Since federal law still considers marijuana an illegal Schedule 1 drug, most U.S. banks won't accept marijuana businesses as customers. But if the Marijuana Businesses Access to Banking Act of 2015 makes it into law, that will no longer be a problem.
Western lawmakers lead the way: S. 1726 was introduced by Colorado Sens. Michael Bennett and Cory Gardner, Oregon Sens. Jeff Merkley and Ron Wyden and Washington Sen. Patty Murray. Bennett, Merkley, Wyden and Murray are Democrats, Gardner is a Republican.
The proposal would create a safe harbor from criminal prosecution and liability and asset forfeiture for banks that provide financial services to legitimate, state-sanctioned pot operations.
It also would prevent federal banking regulators from:
- Prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated marijuana business;
- Terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned marijuana business;
- Recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or
- Taking any action on a loan to an owner or operator of a marijuana-related business.
House action, too: The Senate measure is the companion to the House bill H.R. 2076, introduced in April by Reps. Ed Perlmutter (D-Colo.) and Denny Heck (D-Wash.).
The odds of loosening restrictions on banks who want to work with legal weed sellers are getting better.
Last summer, the House passed 231-to-192 a bipartisan amendment to the fiscal year 2015 Financial Services and General Government Appropriations bill to prevent Treasury and the Securities and Exchange Commission from spending any funds to penalize financial institutions that provide services to legal marijuana businesses.
Safety, taxes cited as reasons for change: Supporters of the banking law change say safety is a key concern in the 23 states and the District of Columbia where voters have approved recreational and/or medical use of marijuana. Without access to banks, many legal pot operations must run on an all-cash basis.
Not only are the marijuana store owners at risk from robberies and other crimes, so are the employees and customers.
In addition, the lack for financial institution access also poses problems for businesses trying to pay their taxes, obtain licensing fees and meet other ordinary operational expenses.
"The legal marijuana industry is worth nearly $3 billion nationwide," says Aaron Smith, executive director of the National Cannabis Industry Association. "We shouldn't be forced to carry that around in duffel bags."
States cashing in on pot taxes: The amount of revenue that states are taking in thanks to marijuana laws also could help smooth out current federal financial (and other) roadblocks.
As I noted last week at my other tax blog, Washington State’s first 12 months of taxable marijuana sales were much better than expected. The Evergreen State raked in $70 million in pot taxes from July 8, 2014, to July 1 of this year.
Also over at Bankrate Taxes last week, I looked at recommendations that the Internal Revenue Service offer taxpayers more digital options.
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