RELEASE: National Cannabis Industry Association Hails Opening of Banking Services for the Cannabis Industry

Justice and Treasury Departments issue guidance clearing the way for banks to serve state-authorized cannabis businesses

Legal cannabis industry projected to produce $2.57B in revenue in 2014, a ripe new market for financial services

DENVER – The National Cannabis Industry Association (NCIA) today lauded the opening of banking services for the multi-billion-dollar legal cannabis industry. Guidance issued today by the Departments of Justice and Treasury makes it clear that banks are allowed to serve cannabis businesses operating legally under state law.

In fact, the guidance issued by the Financial Crimes Enforcement Network (FinCEN) included this sentence, removing any doubt about whether the federal government was signaling that this activity can be conducted: “This FinCEN guidance clarifies how financial institutions can provide services to marijuana- related businesses consistent with their BSA obligations.”

“This is a huge victory for our members, our communities, and the banks that take this opportunity to serve a thriving new market,” said NCIA executive director Aaron Smith.

“The legal, regulated cannabis industry is legitimate, professional, and prospering, and our businesses deserve to be treated like those in any other American industry. We’re looking forward to developing beneficial and long-lasting relationships with financial institutions that are ready and eager to work with us.

“We’re grateful to officials at the Treasury and Justice Departments who have been working to resolve this banking crisis. No legitimate business should be forced to manage its payroll, taxes, utility bills, and licensing fees entirely in cash. Today’s guidance allowing for banking access means better security for our members, easier accounting and transparency, and more resources to invest in our local economies.”

Prior to today’s federal guidance, most financial institutions had been unwilling to provide even the most basic banking services, such as checking and savings accounts, to medical or adult-use marijuana businesses. This forced state-authorized businesses to handle their financial transactions entirely in cash.

NCIA and its members will continue to call on Congress to provide even further clarity for financial institutions serving the industry, but today’s guidance clears the way for banks to accept state-legal cannabis businesses as clients. Those banks who do will be adding a flourishing industry to their portfolios — the latest projections from industry analysis firm ArcView Market Research indicate that the legal cannabis industry will add $2.57 billion to the American economy in 2014.

###

National Cannabis Industry Association Applauds Attorney General for Committing to a Banking Fix ‘Very Soon’

Holder announced today that the Obama administration will issue guidance allowing banks to serve state-legal cannabis businesses

Industry projected to produce $2.57B in revenue in 2014, forced to operate almost entirely in cash

DENVER – The National Cannabis Industry Association (NCIA) today applauded remarks from U.S. Attorney General Eric Holder, announcing imminent guidance from the Obama Administration to allow financial institutions to serve state-legal marijuana businesses.

“For the legal, regulated cannabis industry, this is very welcome news,” said NCIA executive director Aaron Smith. “We have been anxiously awaiting clarity on the banking issue from the Justice and Treasury Departments for many months. To hear that guidance will be issued ‘very soon’ is encouraging. It’s critical that we fix this issue before February 20, when our Colorado members must pay their first round of state taxes, or the Colorado Department of Revenue may be forced to accept more than $1 million in cash payments.

“We’re grateful to Attorney General Holder and other federal officials who have been working to resolve this crisis. The safety of our members is threatened by the current lack of banking access and this resolution cannot come soon enough.”

In the absence of guidance from federal enforcers, most financial institutions have been unwilling to provide even the most basic banking services, such as checking and savings accounts, to medical or adult-use marijuana businesses. This forces state-authorized cannabis businesses to handle their financial transactions, including sales, payroll, taxes, and licensing fees, entirely in cash. The latest projections from industry analysis firm ArcView Market Research indicate that the legal cannabis industry will add $2.57 billion to the American economy in 2014.

###

Americans for Tax Reform Releases White Paper Detailing Needed Changes to Marijuana Business Taxes

Grover Norquist and Representative Earl Blumenauer identify unjust application of tax code for legal marijuana businesses at press conference with the National Cannabis Industry Association

Washington, DC – Representative Earl Blumenauer (D-OR), Americans for Tax Reform (ATR) president Grover Norquist, and National Cannabis Industry Association executive director Aaron Smith held a press conference today to mark the release of a new white paper from ATR entitled Legal Cannabis Dispensary Taxation: A Textbook Case of Punishing Law-Abiding Businesses Through the Tax Code. The paper calls for reform of Internal Revenue Code Section 280E, which essentially forces medical marijuana providers to pay taxes based on gross receipts rather than income, unlike all other small businesses.

Additionally, the paper details Americans for Tax Reform’s endorsement of H.R. 2240, the Small Business Tax Equity Act, introduced earlier this year by Rep. Blumenauer and strongly supported by the National Cannabis Industry Association. Mr. Norquist also sent a letter explaining his support for H.R. 2240 to House Ways and Means Chairman Dave Camp.

Statement from Aaron Smith, National Cannabis Industry Association:

Congress needs to take swift action to amend 280E, a leftover relic in the Tax Code that was never intended to apply to small businesses complying with state laws. Without the technical amendment needed to allow these businesses to be treated equally under tax law, states and municipalities that are currently embracing the emerging regulated cannabis industry will never be able to realize its full economic potential. We are pleased to be able to stand with Grover Norquist and Representative Blumenauer on this non-partisan and commonsense issue.

Statement from Representative Blumenauer:

Small, legal marijuana businesses are being victimized by the tax code. They cannot deduct their business expenses like all other businesses. Then cannot claim advantages like the work opportunity tax credit if they hire a veteran. They cannot depreciate their American-made irrigation equipment. This is why I introduced the Small Business Tax Equity Act. Only Congress can fix this problem by updating the federal tax law that forces these businesses to close their doors, or drives them underground, encouraging evasion. I welcome Americans for Tax Reform in endorsing this legislation, a commonsense fix with appeal across the political spectrum.

###

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.

Grover Norquist, Rep. Earl Blumenauer to Hold Press Conference to Decry Unfair Marijuana Business Tax

Event coincides with Americans for Tax Reform release of white paper on the need to reform Section 280E of the Internal Revenue Code

MEDIA ADVISORY
For Press Conference on Thursday, September 12, 2013

Washington, DC – On Thursday, Rep. Earl Blumenauer (D-OR) and Americans for Tax Reform (ATR) president Grover Norquist will hold a press conference to discuss ATR’s release of a white paper entitled Legal Cannabis Dispensary Taxation: A Textbook Case of Punishing Law-Abiding Businesses Through the Tax Code. The paper discusses Section 280E of the tax code, which is misapplied to legal cannabis businesses and creates an effective tax rate two to four times that of other small businesses. Mr. Norquist will also announce Americans for Tax Reform’s endorsement of H.R. 2240, the Small Business Tax Equity Act, which was introduced by Rep. Blumenauer and is strongly supported by the National Cannabis Industry Association.

From the report:

Abstract: Section 280E of the Internal Revenue Code (IRC) creates a gross receipts tax situation for legal cannabis dispensary small businesses. This is due to an accident of history and a perversion of Congressional intent. ATR supports fixing this mistake. H.R. 2240, the “Small Business Tax Equity Act of 2013” does so. ATR urges all Congressmen to support this common-sense legislation.

What’s the issue? Under tax law, legal cannabis dispensaries are unable to claim the ordinary and necessary business expense deductions that any other legal business can claim.

What tax penalties do legal cannabis dispensaries face in these states? Like any other business, cannabis dispensaries must pay taxes on all business revenues. Unlike other businesses, however, this industry cannot deduct ordinary and necessary business expenses to arrive at a true taxable business profit. In essence, they pay a gross receipts tax instead of an income tax.

What: Press conference to present Americans for Tax Reform’s white paper, Legal Cannabis Dispensary Taxation: A Textbook Case of Punishing Law-Abiding Businesses Through the Tax Code

Where: House Triangle, US Capitol, 1 1st Street SE, Washington, DC 20510 (The House Triangle is located on the south side of the Capitol, directly inside the New Jersey Ave. entrance). In case of inclement weather, the press conference will take place at 210 Cannon House Office building.

When: Thursday, September 12, 11 a.m.

Who: Representative Earl Blumenauer (D-OR)

Grover Norquist, President, Americans for Tax Reform

Aaron Smith, Executive Director, National Cannabis Industry Association

###