The Green Sheet Online Edition
October 14, 2013 • Issue 13:10:01
Stars align for medical marijuana sales
In a statement released in August 2013, the U.S. Department of Justice said it will no longer pursue prosecutions of marijuana dispensaries that operate in accordance with state laws and regulations.
The decision, in the form of a memorandum to federal prosecutors, came in the lead-up to a U.S. Senate hearing in which department officials stated they are working with the U.S. Department of the Treasury on a plan that allows marijuana dispensaries to maintain bank accounts. Senate Judiciary Committee Chairman Sen. Patrick Leahy, D-Vt., called the hearing to examine conflicts between state and federal marijuana laws.
To date, 21 states have legalized marijuana for medical purposes; 16 of those also have decriminalized possession of small amounts of pot. Washington and Colorado were the latest to join the group, having legalized the possession of small amounts of marijuana and set in motion processes for state regulations that address how pot is produced and distributed in those states.
"These new laws are just the latest examples of the growing tension between federal and state marijuana laws, and they underscore the persistent uncertainty about how such conflicts will be resolved," Sen. Leahy said.
Backing away from prosecutions
Two years ago, the DOJ forced shut downs of several marijuana dispensaries in California on grounds that they violated federal law. That had a chilling effect on relationships between dispensaries and financial services companies. Banks have been refusing to open accounts for marijuana dispensaries, as have merchant services providers, fearing the federal government would prosecute them for working with criminal enterprises. As a result, many dispensaries operate as cash-only businesses, even going so far as to pay taxes and state licensing fees in cash.
In late August, the DOJ issued a memo instructing federal prosecutors to de-prioritize enforcement of marijuana laws against state-licensed dispensaries, provided they are in compliance with state regulations. And in response to questions posed by Sen. Leahy, Deputy U.S. Attorney General James Cole said his office is working with Treasury officials on the banking conundrum, although he didn't elaborate.
In related news, Rep. Earl Blumenauer, D-Ore., introduced legislation in Congress that would put marijuana dispensaries on an equal footing with other businesses under the federal tax code. The legislation would accord dispensaries the same tax advantages as other businesses, including deducting business expenses and depreciating American-made irrigation equipment.
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