Medical marijuana may now be legal in the state of Utah, but on the federal level, dealing in marijuana is still a crime – and that’s causing a major problem for our banking industry.
If a bank does business with a legally-operated marijuana company, officially, the federal government would be able to charge them as drug money launderers. That’s a law that left a lot of banks unwilling to risk doing business with the marijuana industry, and a lot of the businesses forced to do everything from paying their employees to their taxes in cold hard cash.
It’s a law that Utah Rep. Ben McAdams believes causes more problems than it solves, and one that some federal lawmakers have been trying to repeal for years.
On Monday, one week after attending a hearing for the bill that would allow banks to deal with the marijuana industry, McAdams sat down with KSL Newsradio’s Ethan Millard to explain why he believes it needs to change.
Banking and the Marijuana Industry
The federal law that could have banks prosecuted for dealing with the marijuana industry hasn’t really been put into use. However, the threat that it could be, McAdams says, is enough to scare most banks away.
“The banks are actually really concerned about it,” McAdams told Ethan Millard.
Any bank that deals with a marijuana company, he explained, risks losing their federal charter, which would essentially put an end to their business. Most banks, he says, aren’t willing to take that risk.
“To a bank, any degree of risk, especially when the risk is the end of your banking organization — they’re not getting into it.”
The result is that the marijuana industry – which brought in about $7 billion last year in California alone – has become almost exclusively a cash business, including at tax time.
In California, a little less than 50 percent of cannabis growers and dispensaries pay their taxes in cash, requiring them to transport a small fortune in bills to one of twenty-two tax offices that can process their money.
In Oregon, it’s even more extreme. According to the Economist, once a month, businesses are required to bring their tax payments in cash to a single, guarded, bulletproof site in Salem, regardless of how far away their company’s headquarters might be.
The idea of that much money moving around the state once a month leaves McAdams very worried. He says that he’s heard stories about marijuana industry employees carrying upwards of $500,000 in their backpacks just to handle their company’s finances.
It’s not just the threat of muggings, however, that make McAdams nervous. He’s also concerned about the risk of encouraging cannabis industries to keep their finances off the books, where law enforcement officials can’t track it.
“If that’s a cash business, entirely off the books … what’s to say it doesn’t finance other things?” McAdams asks.
Those law and safety issues, McAdams says, are his real concern.
“I actually don’t support recreation marijuana,” McAdams says. “The bill’s not getting into that. The bill’s saying … let’s just let the states decide at this point, and what we will do is allow the banks to provide financing for it in this safe harbor.”
House Resolution 2215 received its first hearing last week, nearly two years after first being presented to the House. The future of the bill remains uncertain. McAdams, however, is confident that, with its widespread bipartisan support, it stands a good chance of getting passed before the end of 2019.
More to the story
Rep. Ben McAdams spent a full hour in the KSL Newsroom, talking about everything from medical marijuana to Alexandria Ocasio-Cortez and the spats between Democrat leaders and Donald Trump.
If you missed what he had to say live on KSL Newsradio, you can still catch every minute of it on the Dave & Dujanovic podcast.
Today’s Top Stories
- Susan Powell can’t be in Nutty Putty Cave, investigators say
- DWR lets people take unlimited number of fish from Wasatch County fishing hole
- Inside a coronavirus hospital in Italy, doctors warn: get ready
- ‘Anonymous’ hacker group threatens to “expose many crimes” of Minneapolis PD
- Fake news: what it is, and how it can influence politics
- Another 4.4 million Americans filed for unemployment benefits last week
- ‘Modern Family’ actor Ty Burrell teams up with Salt Lake City to help laid-off…
- Another mountain lion spotted in Salt Lake County
- Opponents try to stop SLCO tax hike for UTA
- What Are You Getting Your Neighbors and Friends for the Holidays? Mason Jar Gifts Might Just…