Starting your own business is the American dream for a lot of people, like me. You get to be your own boss, build something from scratch, and enjoy its success. But for some aspiring business owners in a few states, their small businesses have turned into big money problems, and it’s not because of the economy. Instead, the federal government has forced them to only accept cash in an electronic economy, even though they sell marijuana, which is legal in some states. But the federal government says it’s still against the law.
Even if you own a business that sells marijuana in a state where it’s legal, even if it’s for medical use, you will have trouble getting a bank loan, accepting credit cards (or getting one for your business), claiming any business expenses on your taxes, or even putting your income and expenses through many bank accounts. Even if federal laws that say banks can’t do business with people who sell certain drugs aren’t just aimed at marijuana sellers in states where it’s legal, the feds haven’t been shy about going after legal dispensaries in recent years because of those laws.
It’s just another example of how the federal government is willing to use any tool it has — in this case, its oversight of financial institutions — to force its citizens to follow a set of moral rules that more and more of them don’t agree with.
A Gallup poll taken in October found that 58 percent of Americans now think that marijuana should be legal. To be clear, they weren’t asked if “medical marijuana” should be legal, which has been supported by a large majority for a long time, or if possession of marijuana should be made less illegal. Instead, they were asked if the drug itself should be legal. A Pew Research Center Poll found that a solid 60% of Americans think the federal government should stop enforcing federal laws against marijuana in states where it is legal. Also, 70% of Americans think the money we spend on enforcing marijuana laws isn’t worth it.
But in Colorado and Washington, where people voted to make all sales and possession of marijuana legal, businesses that follow the law have to deal with a government policy that makes them less safe, their customers less safe, and the state less likely to get the tax money it is counting on. These businesses are cash-only and have to stay that way. This means that many small business owners pay their employees in cash, pay their taxes in cash, and buy most of their goods and supplies in cash. This makes them more vulnerable to violent crime than the average small business owner.
Worse, some people in law enforcement have warned that it makes the whole system vulnerable to bad people who see businesses that only accept cash as ways to launder money or cheat the system.
Also, Attorney General Eric Holder said last week that his department is working on “legal guidance” for prosecutors and law enforcement to explain how these businesses should be able to use the banking system. This doesn’t mean that the guidance will mean that legal dispensaries are free to go. In 2009, the federal government gave similar advice, which law enforcement did not follow when they raided the shops the advice was meant to protect. Politico said when the guidance was released that it “wouldn’t be enforceable in court and wouldn’t be as clear as the safe harbour that many banks say they would want before taking money from marijuana businesses.”
This nonsense needs to stop. Marijuana should be legal, say the people of Colorado and Washington. It is legal for medical use in 18 states and the District of Columbia. Even the state I live in, New York, is starting a test programme for medical marijuana. Most of our Congressional leaders have tried it, and it’s looking less and less likely that we’ll ever have another president who can say he or she didn’t inhale.
So there’s no reason for small business owners to bear the brunt of the federal government’s desire to enforce a marijuana prohibition law that its own people don’t like and that many states have thrown out. And there’s even less reason to make the people who work for private banks and credit card companies the de facto enforcers of that law. If it’s going to be legal, small business owners who sell it should have the same access to the financial system and the same protections that system gives them as any other small business owner in America.
The only way to make the system safe, secure, easy to monitor, and taxable is to treat it like any other business in the eyes of (federal) law and the banks that can help it grow.