Bank holiday must end
Commentary: By R.E. Graswich
Cities, counties and the State of California can regulate and license every corner of the medical marijuana industry. But they can’t help cannabis cultivators open a bank account.
Months after passing its first batch of regulatory laws to govern the state’s billion-dollar marijuana industry, California authorities are still helpless to solve the biggest cannabis problem of all — what to do with all that money.
The money is cash — not because growers, wholesalers and retailers want it that way, but because the federal government continues to maintain marijuana’s status as a Schedule I drug, the category reserved for the pharmacy's worst offenders.
The federal Drug Enforcement Administration defines Schedule I class members thusly: “Drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse. Schedule I drugs are the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” The feds includes heroin, LSD, ecstasy, methaqualone, peyote and cannabis.
Given marijuana's Schedule I status, any bank that does business with the cannabis industry can be accused of money laundering or racketeering. That would be bad for business, so rather than take a chance, banks refuse to handle accounts for persons or businesses that grow, manufacture, transport or sell marijuana.
“It’s a huge problem, and there is no solution as of right now,” says Hezekiah Allen, executive director of the California Growers Association, which represents craft and independent cannabis farmers. “It’s a federal issue.”
Allen and other advocates have asked California officials to “keep the pressure” on federal authorities to create a banking solution. There is plenty of momentum — states such as Colorado and Washington that have legalized adult recreational use must deal with mountains of cash moving around their communities.
The federally imposed cash economy is responsible for burglaries, robberies, assaults and murders. And it prevents many growers from coming in from the shadows and becoming legitimate business operators. As is, the California Board of Equalization establishes special security measures to accept tax payments in cash from cannabis industry members who are just trying to follow the law.
The problem will become worse as California begins regulation and the industry starts to pay substantial water and agricultural fees. Armed guards and armored trucks will be making regular stops at regional water districts and county ag boards.
Big operators can work around the banking ban by setting up shell companies with bank accounts. But even then, they are technically breaking the law and living a lie. The only real solution is Schedule I reform — a Washington lobbying task that should be led by California and its booming cannabis industry.