A coalition of the top financial regulators in 13 states is demanding congressional action to protect banks that serve marijuana businesses.
In a letter sent to congressional leaders late last week, the regulators stressed that conflicting state and federal cannabis laws have inhibited economic growth, created confusion among state banks and credit unions and jeopardized public safety.
“It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space without the looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties,” the regulators wrote.
“While Congress has taken some action, such as the Rohrabacher amendment prohibiting federal funds being used to inhibit state medicinal marijuana programs, this has been an impermanent approach that requires a permanent resolution.”
Finance officials from Alaska, Connecticut, Hawaii, Louisiana, Michigan, Montana, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Utah and Washington State signed the letter.
One of the factors that prompted the letter was Attorney General Jeff Sessions’s decision earlier this year to rescind the Obama-era “Cole memo,” which offered some enforcement guidelines for federal prosecutors when it comes to marijuana laws. Rescinding the guidance led to “uncertainty about banks’ ability to serve this industry without running afoul of federal statutes,” the regulators wrote.
A majority of states now have medical marijuana programs and it has become increasingly necessary to craft policy to respond to emerging challenges in this rapidly growing industry. Read my letter to Congress on this issue: https://t.co/1INz2z3ZXl pic.twitter.com/1ADYkPoKkx
— Robin L. Wiessmann (@SecWiessmann) August 27, 2018
The letter also recognized that this coalition is not alone in its demand for clarity around banking and cannabis policy.
In June, a bipartisan group of 12 governors called on lawmakers to pass the STATES Act, a bill that amends the Controlled Substances Act to create an exemption for state-legal marijuana activity. That bill would effectively protect banks dealing with cannabis businesses.
“Our states have acted with deliberation and care to implement programs through thoughtful and comprehensive legislation and regulations,” the governors wrote. “Our citizens have spoken, we are responding. We ask that Congress recognize and respect our states’ efforts by supporting and passing the STATES Act.”
Confusion in the finance industry over marijuana policy appears to be coming to a head in the United States. As federally backed banking institutions continue to reject clients who deal in the marijuana industry, more businesses are turning to a handful of institutions that are willing to serve cannabis growers, processors and retailers—but the regulators said that’s only a temporary solution.
One example of the consequence of state and federal policy conflicts was recently reported by Marijuana Moment. A candidate running for a Florida agricultural commission seat was told that her Wells Fargo account would be closed after the bank discovered donations from “lobbyists from the medical marijuana industry.”
“A majority of states now have medical marijuana programs and it has become increasingly necessary to craft policy to respond to emerging challenges in this rapidly growing industry,” the new letter from financial regulators concludes. “We must work together to look for solutions rather than avoiding this challenge and ignoring the new policy landscape.”
Marijuana Legalization Increases Home Property Values, New Study Finds
There are plenty of marijuana NIMBYs out there, but a new study found that cannabis legalization and the presence of dispensaries actually increases home property values.
The research from Clever Real Estate draws on data from Zillow, the U.S. Census and other sources. A main takeaway is that from 2017 to 2019, “home values increased $6,338 more in states where marijuana is legal in some form, compared to states that haven’t legalized marijuana.”
Part of the reason for the increased value is that legalizing and regulating cannabis means tax revenue for states. And that revenue translates into “new investment in things such as public services and infrastructure,” the company found, driving up property value.
For every $1 million in additional tax revenue from marijuana sales, home values increase by $470, according to the study.
Take Illinois as a case in point. Last year, the state sold about $670 million in cannabis and took in $205.4 million in tax revenue. And that revenue has gone towards a wide range of causes such as supporting organizations that work to decrease street violence. If successful, reducing violence in a given community would be one simple way to increase property value.
The Clever Real Estate study also found that states that legalize for adult use see the greatest gains in home value.
“Between April 2017 and April 2021, property values rose $17,113 more in states where recreational marijuana is legal, compared to states where marijuana is illegal or limited to medicinal use,” it said. And for the states that have enacted legalization but where sales have yet to start, “home values are predicted to increase by an average of $61,343.”
The presence of cannabis dispensaries nearby also seems to be correlated with an increase in home value.
“Home values increased $22,090 more in cities with recreational dispensaries, compared to home values in cities where recreational marijuana is legal but dispensaries are not available,” the study says. “With each new dispensary a city adds, property values increase by $519.”
“When we controlled for other factors, we found that home values in areas that have legalized recreational marijuana leapt by $17,113 more than places where marijuana is illegal or only allowed for medicinal use. Even when we limited the comparison to recreational versus medicinal legalization, this disparity persisted. Places that legalize recreational marijuana saw home values increase by $15,129 more than those that only legalized medicinal use.”
Last year, a separate analysis from economists at the University of Oklahoma similarly found that states that legalize marijuana actually see a boost in housing prices, with the effect most pronounced once nearby retail outlets open for business.
“This demonstrates that [it is] not simply the benefits of increased tax revenue, but also the existence of the dispensaries themselves, that is driving the price increases,” the researchers found. “The dispensaries act as commercial amenities that the public puts a premium on being nearby.”
Photo courtesy of WeedPornDaily.
Missouri Governor Vetoes Medical Marijuana Tax Deduction Bill
The measure, if enacted, would not have changed the federal 280E provision that remains in effect against cannabis businesses.
By Jason Hancock, Missouri Independent
Missouri Gov. Mike Parson (R) vetoed legislation Friday that would have lifted a prohibition on licensed medical marijuana companies deducting business expenses on their taxes.
In his letter vetoing the measure, Parson didn’t mention the medical marijuana provisions. He said his decision to reject the bill came down to a section lawmakers included that would have provided tax relief for businesses impacted by city-wide or county-wide public health restrictions.
Parson said those provisions would have created “significant unintended consequences that could greatly harm localities.”
In vetoing the bill, however, the medical marijuana provision was also struck down.
Missourians voted to legalize medical marijuana in 2018. But under federal law, growing, transporting or selling marijuana remains a crime.
Because of this dynamic, marijuana companies differ from every other legal business in the state because they can’t deduct ordinary and necessary business expenses on their tax returns.
While federal law remains unchanged, the legislation approved nearly unanimously in both the House and Senate would have changed that for state taxes.
David Smith, a certified public accountant from St. Louis County who works with numerous medical marijuana companies, said during a Senate hearing earlier this year that Missouri’s existing law could mean an effective tax rate for those businesses of 70 percent or higher.
“Some companies may even be subject to income taxes while operating at a loss,” Smith said.
Andrew Mullins, executive director of MoCannTrade, said it was “both common sense and smart public policy to put medical cannabis businesses on a level playing field with all others that pay state business taxes.”
“While disappointed in the veto, we remain encouraged by the overwhelming bipartisan support for a measure of basic tax fairness that received near-unanimous votes in both the state House and Senate,” Mullins said in a statement to The Independent. “As our state’s newest industry continues to create thousands of new jobs and generate tens of millions in new spending each month, we look forward to again passing this policy change and seeing it signed into law.”
Another casualty of the veto was a provision providing sales tax exemptions for certain cancer treatment devices. Parson wrote in his veto letter that he supports this tax deduction and hopes lawmakers will pass it again next year.
First Full-Service Marijuana Delivery App Launches On Apple Store Following Policy Change
Apple has long restricted marijuana companies from conducting business on its app store. But following a recent policy change, the cannabis delivery service Eaze on Thursday announced that consumers can now shop and pay for marijuana products on its iPhone app for the first time.
This marks a “major milestone for the legal cannabis market and consumers,” Eaze said in a press release. “The Eaze app allows customers to complete all aspects of delivery seamlessly: registration, ID verification, product selection, payment, and receipt to the doorstep.”
Previously, people buying marijuana through the nation’s largest cannabis delivery service had to leave the prior version of the app and submit orders through a less-convenient mobile version of the company’s web page. The Apple policy change means the service is streamlined, and it represents a significant development in the evolving relationship between Big Tech and the marijuana industry.
“Eaze has always been about using the latest developments in technology to make shopping for legal cannabis more accessible,” CEO Rogelio Choy said. “It’s hard to overstate how important this is to our company and the industry. It’s deeply gratifying to launch the Apple Store’s first fully-functional cannabis delivery app, making it even easier for our two million registered customers to legally consume.”
In contrast to Apple, Google’s Android app hub updated its policy in 2019 to explicitly prohibit programs that connect users with cannabis, no matter whether it is legal in the jurisdiction where the user lives.
“We don’t allow apps that facilitate the sale of marijuana or marijuana products, regardless of legality,” it says, adding that some examples of violations would be “allowing users to order marijuana through an in-app shopping cart feature” or “assisting users in arranging delivery or pick up of marijuana.”
It also says that “facilitating the sale of products containing THC (Tetrahydrocannabinol), including products such as CBD oils containing THC” is against its policies.
Eaze Distinguished Engineer CJ Silverio said that the “flexibility and depth of our technical team allowed us to respond immediately to the changes in Apple’s policy, and create an app that offers our customers the ideal experience for cannabis delivery.”
Chris Vaughn, CEO of the California delivery service Emjay, previously told WeedWeek that he believes Apple’s decision was informed by the continuing legalization movement in states like New York, as well as Amazon’s recent announcement that it will no longer be drug testing workers for cannabis in addition to lobbying for a federal legalization bill. He added that he thinks Google will “follow quickly” to update its own policies.
The tech industry has had a strained relationship with the marijuana industry, even as a growing number of states have decided to legalize and regulate the sale of cannabis.
Facebook, which in 2019 showed off its artificial intelligence technology that’s capable of identifying images of marijuana, continues to prohibit the commercial advertising of cannabis products, regardless of the legality of the business under state law.
Noncommercial cannabis news sites such as Marijuana Moment and state regulatory bodies like the Massachusetts Cannabis Control Commission have also been caught up in the anti-marijuana policy despite the fact that they do not promote or sell cannabis products. In some cases, it appears these organizations have been hidden from appearing in search results—a practice known as “shadowbanning.”
Despite marijuana firms being banned from Google’s app market, some of the company’s top officials seem pretty bullish about loosening cannabis laws. Google co-founder Sergey Brin joked about supplying employees with joints at a post-election meeting in 2016.
“I was asking if we could serve joints outside on the patio, but apparently these things take a little while to take effect,” Brin said, referring to the implementation of California’s cannabis legalization measure. “It was a huge, huge disappointment. I’ve been bemoaning that all week, I’ll be honest with you.”
Photo courtesy of Martin Alonso.