With the Colorado recreational pot explosion slowly gaining the nation’s acceptance, and in the process, proving to the world that recreational marijuana can go off without a hitch, the U.S. Treasury and law enforcement agencies are more accepting of state-sanctioned cannabis businesses.
Colorado’s legalization of recreational marijuana sales opened its first pot store on January 1.
Although our government isn’t ready to light up just yet, the Obama administration and at least some Republican governors appear to be more accepting of the idea, perhaps starting to agree with the majority of Americans, 58 percent of them, who favor legalization of marijuana.
Proprietors of state-licensed marijuana distributors in Colorado and elsewhere have complained of having to purchase inventory, pay employees and conduct sales entirely in cash, requiring elaborate and expensive security measures and putting them at a high risk of robbery.
US Attorney General Eric Holder said, earlier this week, that the federal government will issue banking regulations for state-approved marijuana businesses who are licensed to sell the drug for recreational or medical use, even though it still remains in the illegal narcotic classification under federal law.
“You don’t want just huge amounts of cash in these places,” Holder told the audience at the University of Virginia. “They want to be able to use the banking system. And so we will be issuing some regulations I think very soon to deal with that issue.”
Banking services and access to credit for newly licensed recreational pot stores are presently non existent, these businesses are running on a “cash basis”, as well as medical pot dispensaries in other states.
It also makes accounting for state sales tax-collection purposes difficult.
With Washington State slated to launch its own marijuana retail network later this year, and several other states, including California, Oregon and Alaska, are expected to legalize recreational weed in 2014, the huge cash flow could be a problem.
With the success of the recreational pot sales in Colorado presently, hitting one million dollars in sales the first day, the weed proprietors are requiring access to banking to make deposits, obtain loans and allow credit and debit card sales.
But the problem lies with the fact that under federal law, the drug is still outlawed and banks cannot do business with them. They are under restriction for handling cash, as well as money-laundering laws that stem from proceeds of illegal drugs.
The lack of credit for marijuana businesses poses its own criminal justice concerns, Holder said.
“There’s a public safety component to this,” he said. “Huge amounts of cash – substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited – is something that would worry me just from a law enforcement perspective.”
Although there were no timelines put in place for banking services for legal marijuana sales, Holder’s deputy James Cole said the Justice Department was working on the issue with the Treasury Department’s financial crimes enforcement network.
There are still some major hurdles to overcome, however.
“We are in the midst of creating a corporate, for-profit marijuana industry that has to rely on addiction for profit, and that’s a much bigger issue than whether these stores take American Express,” said Kevin Sabet, co-founder of the anti-legalization group Smart Approaches to Marijuana.
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