NCIA Board Plans Future for Industry’s Trade Association

By Aaron Smith, NCIA executive director

The National Cannabis Industry Association’s newly-elected Board of Directors met last week in Seattle to receive presentations from staff and provide strategic direction for the organization’s core efforts.

One of the primary responsibilities of the board is to oversee NCIA’s financial affairs, which are very healthy as membership rolls have reached nearly 700 cannabis businesses midway through the year. NCIA’s revenues are 10% over the projections for Q1 and Q2 and spending is on target. The success of our national conference and growth in membership have allowed NCIA to hire an additional events coordinator who will assist the organization in building out a robust agenda of educational and networking events for members.

The board also received presentations from Deputy Director Taylor West and Director of Government Relations Michael Correia on NCIA’s communications and lobbying efforts, respectively. NCIA and the cannabis industry have garnered more media attention in 2014 than ever before, raising awareness of the positive contribution responsible cannabis businesses make to the national economy and growing public support for the federal and state policy reforms needed to advance the regulated industry across the country.

The addition of a full-time staff lobbyist at the end of last year has allowed us to provide more political representation in Washington, DC than ever before. NCIA’s director of government relations has already made contact with every congressional office and has personally met with over 200 House offices and 30 Senate offices to build support for amending the 280E provision of the tax code as well as reforms to banking regulations so that the cannabis providers will someday (hopefully soon) have access to basic financial services all other industry’s take for granted.

A former Republican Hill staffer himself, Michael Correia, has focused primarily on building relationships with conservative members of Congress and appealing to them on issues of states’ rights and limited government. This effort helped lead to the Republican-controlled House of Representatives voting for the first time to block federal resources from to be used to undermine state medical marijuana laws or penalize financial institutions for doing business with state-legal cannabis providers.

The board also collectively donated over $8,000 to NCIA’s federal PAC during the meeting so that the industry can further support candidates that support our issues in the months ahead.

Before concluding the meeting, board members re-elected Ean Seeb of Denver Relief as the board chairman and elected John Davis of Northwest Patient Resource Center as vice-chair.

The future is bright for the cannabis industry and its trade association but there is still a lot of work that needs to be done before our members are treated fairly under federal law. As NCIA grows, we will continue to dedicate resources to important government and public relations work as well as building a culture of responsibility and political engagement within the industry.

URGENT ACTION NEEDED: Contact Your Member of Congress Today!

Around 2pm ET today, the House of Representatives is expected to vote on two amendments to the Financial Services Appropriation bill that could affect the ability of cannabis businesses to access banking services. We need your help. Please call your Representative’s office and urge him or her to vote NO on the Fleming amendment and YES on the Heck/Rohrabacher/Perlmutter/Lee amendment.

The Fleming amendment would block the guidance issued by the Department of Treasury in February that began to open the door for banks to provide services to our industry. Urge your Representative to vote NO.

The Heck/Rohrabacher/Perlmutter/Lee amendment would allow cannabis businesses operating in compliance with state law to access the banking system. Urge your Representative to vote YES.

You can find your Representative’s contact information by going to this link and entering your zip code.

Here is some additional information to help you share your story with your Representative:

23 states and the District of Columbia have legalized the use of either medical (21 states) or adult and medical-use (2 states) marijuana.
Because marijuana remains classified as Schedule I drug, individuals who grow, possess, use, sell, transport, or distribute marijuana remain subject to federal criminal prosecution, even in states that have legalized those actions.
Consequently, financial institutions providing banking services to legitimate marijuana businesses are subject to criminal prosecution.
Earlier this year, DOJ and Treasury released guidance for banking regulators on how banks can provide services to legitimate marijuana business. While the guidance has not fully solved the problem—many banks are still reluctant to offer financial services to marijuana businesses—it has created a framework for allowing marijuana businesses to access the banking system.
As cash-only businesses, marijuana businesses are targets for crime and robbery, which puts employees, customers, bystanders and law enforcement at risk.
The inability of marijuana related businesses to access the banking system also makes it harder for regulators and law enforcement tomonitor transactions and prosecute crime.
Restricting marijuana business’s access to banks forces them to operate as a cash-only business, which results in a serious public safety and law enforcement concern. In the last two years, marijuana businesses in Denver have suffered from an annual burglary rate of about 50 percent.

The Heck-Perlmutter-Lee-Rohrabacher Amendment will allow legitimate marijuana-related businesses operating according to state laws to access the banking system in an effort to reduce the risks and public safety concern of operating as a cash-only business. The Amendment stops banking regulators from penalizing financial institutions for providing services to marijuana related business that operate according to state law.

Obama administration clears banks to accept funds from legal marijuana dealers | Washington Post

The Obama administration on Friday gave the banking industry the green light to finance and do business with legal marijuana sellers, a move that could further legitimize the burgeoning industry.

For the first time, legal distributors will be able to secure loans and set up checking and savings accounts with major banks that have largely steered clear of those businesses. The decision eliminates a key hurdle facing marijuana sellers, who can now legally conduct business in 20 states and the District.

Banks still wary about marijuana business | Politico

When it comes to doing business with marijuana sellers, it’s going to take a lot more than a thumbs-up from Eric Holder to get paranoid bankers on board.

The U.S. attorney general made waves last week when he said the Obama administration plans to give banks the go-ahead to make loans or open accounts for marijuana dispensaries in states where they’re legal without running afoul of federal laws, which still consider cannabis an illegal substance.

While the reassurance from Holder is nice, bankers say it’s not that simple.

US marijuana policy edges toward acceptance | Christian Science Monitor

Uncle Sam isn’t ready to light up just yet, but the Obama administration and at least some Republican governors seem to be edging toward a more accepting attitude toward marijuana use. Or at least they’re falling in line with that majority of Americans – 58 percent, according to Gallup – who favor legalization of marijuana.

US Attorney General Eric Holder this week said the federal government will issue banking regulations for state-approved marijuana businesses licensed to sell the drug for recreational or medical use.

Medical marijuana firms face cash economy as banks steer clear | Boston Globe

The conflict between federal and state marijuana laws has become a bigger issue as more states legalize the drug for medical and, more recently, recreational, uses. Dispensaries in the other 19 states that have legalized medicinal cannabis have run into similar banking problems, requiring entrepreneurs to hide the nature of their business, establish separate holding companies, or just haul around bags of cash.

Last week, Attorney General Eric H. Holder Jr. said that legal marijuana businesses should have access to the banking system and that the Obama administration would provide rules aimed at easing banks’ concerns, mainly by making these activities low priorities for federal prosecutors.

Bank officials in Massachusetts, however, are far from assured, worried what might happen under different administrations. Their preferred solution: changing federal law.

Illinois pot stores may just accept cash | The Herald & Review (IL)

SPRINGFIELD – Even after the state implements rules for the sale of medical marijuana, federal banking regulations could make Illinois’ budding cannabis industry a cash-only operation.

While Illinois already has moved to legalize the use of marijuana for certain medical conditions, federal regulations prevent marijuana dispensaries and related businesses from using federally insured banks.

“What it means for a lot of businesses is that they’re forced to operate entirely in cash,” said Taylor West, deputy director of the National Cannabis Industry Association in Washington, D.C. “That’s not just the sales side. It also affects the business side.”

Federal officials, financial industry representatives meet to address marijuana banking crisis

The federal Bank Secrecy Act Advisory Group met December 12 for a “frank discussion” among federal regulators, financial industry representatives, and members of law enforcement regarding the banking crisis for state-legal marijuana businesses.According to Jennifer Shasky Calvery, director of the federal Financial Crimes Enforcement Network (FinCEN), FinCEN and other Treasury Department groups have begun conversations with the Department of Justice. The Bank Secrecy Act Advisory Group advises the Director of FinCEN on the operations of the Bank Secrecy Act (BSA) and is the means by which modifications to BSA regulations are considered. Current BSA regulations require banks to file “Suspicious Activity Reports” any time a transaction of $5,000 or more takes place if the financial institution has reason to believe that it may be connected to illegal activity. This requirement is the core policy creating an impediment to marijuana businesses securing and maintaining bank accounts.A September Senate Judiciary Committee hearing reinforced the growing consensus among federal and state officials that the lack of access to banking services is now the most pressing obstacle to ensuring governments can control marijuana sales in the states where it is legal for medical or adult use and federal enforcement priorities can be upheld. Chairman Patrick Leahy (D-VT) was particularly aggressive in his push for a solution to the problem, urging U.S. Deputy Attorney General James Cole to fix the problem before we have a “shoot out somewhere and have innocent people or law enforcement endangered by that.”

Though little is expected to result immediately from this meeting and details remain under wraps, it clearly indicates that a growing group of lawmakers and regulators are aware that excluding a billion-dollar legal market from banking services is untenable.

Aaron Smith, executive director of the National Cannabis Industry Association, addressed the problem in a statement to the media, saying, “Without access to basic banking services, many legitimate cannabis businesses are forced to manage sales, payroll, and even tax bills entirely in cash. That puts their customers, employees, and fellow community members at completely unnecessary risk. Everyone agrees that the situation is untenable; the Treasury Department and the Department of Justice must act and act quickly. The tide of public opinion is turning ever more quickly in support of regulated marijuana markets and, in 2014, at least six states will be implementing new regulations for these markets. It is long past time for the federal government to stop putting citizens in harm’s way by denying legally recognized businesses access to secure banking services.”

Judiciary Committee Hearing Underscores Consensus: New Marijuana Industry Requires Access to Banking

Senators, Deputy Attorney General Cole, and witnesses all call for swift action to resolve banking crisis faced by legal marijuana businesses

Washington, D.C. – Today’s Senate Judiciary Committee hearing reinforced the growing consensus among legal marijuana regulators, law enforcement officials, and cannabis business professionals that allowing access to banking services is now the most pressing obstacle to the success of the regulated marijuana industry realizing its potential to effectively control marijuana sales in the states where it is legal for medical or adult use and ensuring the eight federal enforcement priorities outlined in last month’s Department of Justice memo can be upheld.
Witnesses Deputy U.S. Attorney James Cole, King County Sheriff John Urquhart, and Colorado Governor’s Chief Legal Counsel Jack Finlaw affirmed the concerns of Senators Patrick Leahy (D-VT), Sheldon Whitehouse (D-RI) , and Senator Richard Blumenthal (D-CT) that federal regulators’ actions to block state-legal marijuana business access to simple banking and financial services will inevitably undermine the viability of state-legal marijuana industries. Furthermore, Cole acknowledged that in states where marijuana has been decriminalized or made legal, implementing a strictly regulated system in which marijuana is sold is the only way to prevent criminal activity such as diversion to youth and across state lines and empowerment of criminals and cartels.
“We need to address the [banking situation] and we are working on it,” stated Deputy Attorney General James Cole who indicated the Department of Justice is conferring with the Department of Treasury’s Financial Crimes Enforcement Division to resolve the issue.
Statement from Aaron Smith, NCIA Executive Director:
“The Department of Justice is finally taking seriously the dangers that a lack of access to simple banking services poses to consumers, employees and business owners. We are encouraged that the growing consensus among essentially all stakeholders is that banking access must be available to legal businesses. It portends a quick reform to this dangerous and unnecessary situation.”

###

The National Cannabis Industry Association (NCIA) is the only national trade association working to advance the interests of cannabis-related businesses in the US. NCIA promotes the growth of a responsible and legitimate cannabis industry and works for a favorable social, economic and legal environment for that industry in the United States.