Banking on marijuana.
It's been legal to sell marijuana for recreational use in Oregon since October, and business has been going swimmingly for many dispensaries.
The state is now ready for its cut, in the form of a hefty sales tax - 25 percent of gross receipts - payable monthly starting Feb. 1.
There's just one problem.
While marijuana sales are legal in Oregon they're still illegal as far as the federal government is concerned. And federal law prohibits banks from accepting money derived from an illegal business.
Some credit unions say they aren't sure if that means they can't accept marijuana money either but, to be on the safe side, they also are declining to set up accounts for dispensaries.
Based on Colorado's experience, where an attempt to set up a credit union to serve the $700 million per year industry was blocked by the Federal Reserve, this is probably a wise decision. This means that dispensaries must operate on a cash-only basis, paying bills - including tax bills - with folding money.
In anticipation of the expected influx of cash, Oregon's Department of Revenue has added more employees and implemented additional security procedures at its offices that accept tax payments, including installation of security cameras.
Department employees also are scheduling appointments with operators of marijuana dispensaries on their tax obligations.
The payment of taxes is, however, only one of the financial headaches caused by the conflict between state and federal law.
Under state law, dispensaries are required to have some form of security.
At least one security firm that serves marijuana dispensaries has had numerous bank accounts shut down by nervous bankers who fear running afoul of federal regulators because of the source of the firm's income.
And the owner of a small shopping center in southern Oregon, whose tenants include a marijuana dispensary, has been told by his bank to get rid of his tenant or risk having his loan called.
There is a relatively simple fix to this whole problem: Congress could pass a bill granting banks immunity from federal reprisals for accepting deposits derived from marijuana sales.
Oregon Democrats Jeff Merkley and Ron Wyden co-sponsored just such a bill in the U.S. Senate last term.
The bill never made it out of committee.
Merkley also managed to get a provision attached to the congressional spending bill what would allow allow marijuana businesses operating legally under state law to have access to banking services. The provision was removed before the spending bill was passed.
Merkley's staff says he will renew his efforts to get measures passed this term that would allow banks to do business with marijuana businesses in states where they are operating legally.
"There's a reason most of us don't walk around with thousands of dollars of cash stuffed in our backpacks. It's an invitation to crime and malfeasance," Merkley said.
About two dozen states now allow sales of marijuana, medical or otherwise.
Regardless of one's views on marijuana usage, that train has left the station and is now halfway to Poughkeepsie.
The financial issues need to be addressed. Oregon's situation has turned the state into a de facto money launderer for marijuana dispensaries. And there's nothing to stop marijuana businesses attempting to overpay their taxes and get refunds in "clean" state money, laundering even larger quantities of cash.
Merkley's proposals make sense; they need to be passed.
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|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Jan 25, 2016|
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