TO get a handle on the strange new reality of Washington’s legal marijuana market, consider what could happen when state-licensed pot stores open in December and none of the businesses can get a bank account.
That means no fiscal paper trail for state tax auditors and regulators to follow. No commercial loans or credit-card processing. And piles and piles of cash, in a startup industry estimated at $2 billion.
This is no idle thought experiment. Federal banking regulations consider marijuana transactions as de facto money laundering. Many medical-marijuana dispensaries are unable to access mainstream banks and credit unions.
To create a functioning marijuana market — as voters enthusiastically endorsed when they approved Initiative 502 — state and federal elected officials need to think creatively and act boldly to solve the riddle of banking access.
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A task force helping set up a marijuana market in Colorado, our state’s sister in legalization, has considered solutions including financial cooperatives without federal banking insurance, as well as a state-chartered bank.
Such discussions are just beginning in Washington. Sharon Foster, chairwoman of the state Liquor Control Board, suggested creating the equivalent of a “Good To Go” pass for marijuana stores.
A state-chartered bank, such as the Bank of North Dakota, has been suggested, but it would require tens of millions in state funding for capitalization, making it a non-starter in the face of a $1 billion state budget deficit and obligations to improve public education.
The cleanest solution lies in Washington, D.C. The Treasury Department could amend parts of The Bank Secrecy Act to exempt state-licensed marijuana businesses from reporting requirements intended to target drug traffickers.
That might be tough, but this is an opportunity for our delegation to lead. U.S. Rep. Denny Heck, D-Olympia, was just appointed to the House Financial Services Committee. U.S. Rep. Suzan DelBene, D-Medina, and a former state Department of Revenue director, is on the House Judiciary Committee.
A legal marijuana market needs sharply drawn regulation and strong enforcement. A cash-only industry would be a big mistake. Time for leaders to think creatively and act boldly.