Last month, the Justice Department and the Financial Crimes Enforcement Network (FinCEN) issued simultaneous memos, clarifying the Obama administrationís position on financial institutions working with state-legal marijuana-related businesses. In short, the guidance issued indicated that, absent evidence that the businesses were violating certain Justice Department priorities and assuming the financial institutions complied with new Bank Secrecy Act reporting requirements, it would not be a department priority to prosecute financial institutions that serve these customers.
This guidance for financial institutions follows similar guidance issued by the Justice Department last August, when the department announced that it would not be a priority to prosecute marijuana-related businesses operating in compliance with state laws and regulations, as long as they did not engage in certain activities. The offending conduct, detailed in eight bullet points, included distributing marijuana to minors, diverting marijuana from states where it is legal to states where it is illegal, and allowing revenues to flow to drug cartels or criminal enterprises.
These actions by the Obama administration are considered controversial by a limited number of Congress members who would rather see the Obama administration use the full force of federal law to crush state efforts to embrace more rational marijuana policies. These members are clearly enamored with wasting billions of taxpayer dollars annually in a futile attempt to banish a substance far less harmful than alcohol from the face of the earth. And they are obviously satisfied with prohibitionist polices that guarantee that all profits from marijuana sales enrich drug cartels and criminal enterprises.
Despite these protests, what the Obama administration is doing is both legitimate and logical. It is legitimate because of the long-recognized and accepted practice of prosecutorial discretion, which is especially appropriate when law enforcement resources are limited and when the federal government is actually supporting state efforts to eliminate criminal activity at the local level. And it is logical because the federal policy of marijuana prohibition, which has never been based on fact or science, is a complete and total failure by every possible measure of assessment.
Here is the truth: Marijuana is used by tens of millions of Americans annually ó and it always will be. This should not be surprising, since marijuana not only has well recognized medicinal benefits, but it is also less addictive, less harmful to the user and less likely to be associated with violent behavior than alcohol. In fact, the relatively benign nature of marijuana is a major reason why more than 60 percent of Americans under the age of 65 now believe it should be legal.
So there is really only one question for members of Congress to consider: Given that Americans purchase billions of dollars worth of marijuana annually, do we want that marijuana sold by drug cartels and criminals or by regulated businesses that abide by production and packaging standards and pay federal, state and local taxes? Long ago, this nation answered that simple question with respect to alcohol sales. The logic of regulating marijuana sales ó an objectively less harmful substance ó is even stronger.
The state-legal marijuana industry is already creating tens of thousands of jobs and tens of millions of dollars in tax revenues in this country. It is time to accept it as a legitimate industry, regulate it as appropriate and allow it to flourish.
Consistent with the Obama administrationís rational response to the dramatic change in public opinion and state laws, Congress should focus on passing laws that support states as they shift marijuana sales from the illegal, underground market into legal, taxpaying businesses. There are three bills that would go a long way toward accomplishing this goal:
Building on last monthís action by the administration, the Marijuana Businesses Access to Banking Act of 2013 (HR 2652) would modify a variety of federal laws to ensure that financial institutions can work with marijuana-related businesses without any threat of federal penalty in the future.
The Small Business Tax Equity Act of 2013 (HR 2240) would modify a provision of the Internal Revenue Code that illogically prevents state-legal marijuana-related businesses from taking standard business deductions.
The Ending Federal Marijuana Prohibition Act of 2013 (HR 499), simply summarized, would regulate marijuana like alcohol under federal law.
Once these laws have passed, the federal government will reap a tremendous financial benefit. Instead of spending billions of dollars annually enforcing marijuana prohibition, it will receive billions of dollars annually in tax revenue. And it will do so while respecting statesí rights, individual liberties and public opinion.
Itís time, Congress.
Steve Fox is co-founder of the National Cannabis Industry Association and serves as a strategic advisor to the organization.