Traditionally, businesses that operate on a cash-only basis can be brow-raising, leading one to conclude there must be something sketchy and nefarious afoot.
That, decidedly, is not the case when it comes to Washington state’s legal marijuana retail industry, which, since a voter initiative passage in 2012, has been perfectly upright, legal and gives the state a healthy tax revenue stream.
Yet the more than 400 retailers in our state — as well as the 33 states that have approved medicinal marijuana and nine others that passed recreational pot laws — must skulk around like criminals and deal only in cash because most banks and financial institutions fear government retribution if they do business with them.
Marijuana, of course, is not legal under federal statutes — and, in fact, it remains classified by the Justice Department as one of the most dangerous controlled substances in the nation — so it is understandable that banks are skittish to run afoul of federal regulators and risk significant fiscal penalties, or even prosecution.
It’s time for the federal government to stop treating marijuana businesses as back-alley scofflaws and clear the way for retailers to open bank accounts. Not only would it make running a cannabis business easier and safer (reportedly, there have been reports of an increase of armed robberies at business that handle that much cash), it also would give state regulators a better idea of how much business is being done for tax purposes.
Eight Washington U.S. House members, including Rep. Dan Newhouse, R-Sunnyside, serve as part of a bipartisan, 191-member co-sponsors of HR 1595, the Secure and Fair Enforcement Banking Act of 2019. Last month, the bill easily passed through the House’s Financial Services Committee and soon will be brought to the floor for a vote. Passage is expected, given the Democratic majority in the House; Senate approval is less assured.
The bill does not seek to legalize marijuana sales nationally, nor is it crafted in any way to be an endorsement of marijuana use. (The Trump administration has been unwavering in its opposition to legalization.) It merely acknowledges that, since many states have allowed sales, that banks should not fear prosecution by doing business with state-sanctioned retailers.
Under the current system, marijuana businesses are not afforded the rights granted to other companies. Not being able to accept credit- or debit-cards, written checks or other electronic forms of payment amounts to an undue burden on the more than 500 retailers (and 1,000 growers) in Washington state and elsewhere.
Many political leaders in Washington state and elsewhere have pushed for legislation that removes liability from banks.
The National Association of State Treasurers in late May issued a proclamation asking Congress to loosen banking laws. Duane Davidson, the Republican treasurer of Washington state who originally was opposed to legalization in the state, has testified, “This is not about legalizing cannabis nationwide; this is about a creating safer cannabis industry by allowing mostly cash-based businesses to bank with their local financial institutions.”
Both the American Bankers Association and the National Association of Attorneys General have echoed that opinion, the latter group adding that the current federal regulatory guideline “makes it more difficult to track revenues for taxation and regulatory compliance purposes.” In other words, state and federal governments lose tax money, which hurts citizens who benefit from programs funded by the taxation.
Rep. Denny Heck, D-Olympia, takes the argument a step further, saying the current banking prohibition raises a public-safety issue. At a congressional hearing in February, Heck told colleagues about instances in which marijuana store employees and guards were robbed at gunpoint because they were known to be possessing large amounts of cash from sales. In 2016, a security guard at a Colorado dispensary was fatally shot during a robbery.
Beyond the hassles for marijuana store owners and bankers’ fear of liability, the current system is burdensome on the 10,000 employees statewide who have difficulty securing personal loans because of their income source.
In a recent interview with the online news site Crosscut, Vicki Christophersen, the executive director of the Washington CannaBusiness Association, said “The employees of those businesses can’t do normal things that you and I would do, like go get a car loan or go get a mortgage … The list is endless when you actually start thinking about what people don’t have access to because they don’t have access to normal banking.”
No matter where one falls on the morality question of marijuana, the fact remains it is legal in the state and should be treated no differently than other businesses when it comes to dealing with banks.