This may sound like a story about various problems with the emerging medical marijuana industry in Washington State. It is, in reality, the unfolding story of the slowly-emerging legitimate marijuana industry and what it is going to look like once it gets here. The shape and form is being decided in Washington state, whose citizens raised the issue. Maybe someday we’ll say, “In the early days, out in Washington, what they tried was . . ..” On to the story:
The medical-marijuana industry in Washington, after two years of wild growth, is struggling to move out of the gray market and into business legitimacy. Already on shaky legal footing because of conflict between state and federal law, dispensaries are now bogged down by troubles with banking and federal taxes. In some cases, dispensaries — unable to find a willing bank — are operating solely with cash. That complicates everything from payroll to tax preparation while heightening the risk of robbery.
Some dispensary owners say they’ve resorted to euphemisms — such as a “holistic healing center” — when trying to open a bank account. That’s in part because federal authorities have warned banks that handling receipts from marijuana sales remains illegal under federal law and could violate money-laundering laws. The conflict is not isolated to Washington, one of 16 states — plus the District of Columbia — to allow therapeutic use of marijuana for certain patients.
Most dispensaries operate under a broad — some prosecutors would say mistaken — interpretation of state law that allows groups of up to 10 patients to grow 45 plants in a “collective garden,” and to share the costs. Dispensaries run those gardens, and patients join just long enough to obtain marijuana. The state does not license or regulate dispensaries — leaving that to cities — but does want them to pay taxes. The Department of Revenue collected $755,764 in sales and business taxes in 2011 from 50 dispensaries.
Federal bank regulations do not specifically prohibit doing business with the medical-marijuana industry, and Attorney General Eric Holder told Congress in December that the Justice Department would not make it a priority to go after bankers who did. But in June, Holder deputy James Cole issued a memo warning that “those who engage in transactions involving the proceeds” of marijuana sales “may be in violation of federal money-laundering statutes and other financial laws.”
Let’s not get fooled again. There’s lots more to the story at The Seattle Times.
[image: Google images Washington State flag]