If N.H. legalizes marijuana, banks run risk if they accept deposits
The New Hampshire House may have voted to legalize marijuana this month, but a House committee learned yesterday that there may not be any banks willing to accept pot proceeds or taxes collected by the state.
Federal drug and banking laws make it illegal for banks to handle money from marijuana sales – or state taxes levied on sales – because the drug remains illegal under federal law. Federal officials have given mixed signals about how they will handle banking rules in states that have legalized marijuana. But so far, where marijuana is legal, it is largely a cash-only business, which is difficult to regulate and secure, state banking officials said yesterday.
“Even if the (federal) Treasury said, ‘We aren’t too worried about this,’ it doesn’t change the fact that the laws are still on the books,” Jill Desrochers, general counsel for the state Banking Department, told the House Ways and Means Committee yesterday. “Banks may say, ‘My risk of prosecution (from the federal government) is down, but I still have to comply with the law.’ ”
The bill, which would legalize the possession of an ounce or less of marijuana among people 21 and older, still has a tough fight ahead. Even if it passes the full House again and then the state Senate, Democratic Gov. Maggie Hassan has said she will veto it.
In the meantime, the House Ways and Means Committee is tasked with evaluating how the state would regulate and tax marijuana sales if the bill becomes law.
Under the bill, the state would tax manufacturing facilities and stores at a rate of $30 per ounce and levy a 15 percent sales tax on all marijuana sold. According to the bill’s prime sponsor, Rep. Steve Vaillancourt, a Manchester Republican, the state Department of Revenue Administration has estimated the state would collect between $26.6 million and $39.9 million dollars a year in marijuana taxes.
In written testimony to the committee, Tom Fahey of the New Hampshire Bankers Association described the state-versus-federal issue as a “legal stalemate.”
Running a cash-only operation, Fahey wrote, creates problems for businesses because they must pay suppliers, employees, landlords, utilities and tax bills in cash. “Cash is a bulky and risky way of paying the obligations of a thriving business,” he wrote.
U.S. Attorney General Eric Holder acknowledged that problem last week during an appearance at the University of Virginia. He said federal Treasury and law enforcement agencies are working on regulations that would allow banks to work with state-sanctioned marijuana businesses.
“You don’t want just huge amounts of cash in these places,” Holder said, according to Reuters. “They want to be able to use the banking system. And so we will be issuing some regulations I think very soon to deal with that issue.”
Guidance from Holder and federal prosecutors won’t be enough to comfort state banking officials, Fahey told the committee.
“General Holder is not the only voice on the issue,” Fahey wrote. “Banks face a plethora of rules, regulations and legal restrictions about how they can run their businesses.”
The committee is scheduled to reconvene Tuesday for a work session and possible vote on the bill.
(Annmarie Timmins can be reached at 369-3323 or email@example.com or on Twitter @annmarietimmins.)