More states eyeing Marijuana legalization
FOX Business’ Jeff Flock reports on why more states are considering the legalization of marijuana and the economic benefits that come along with it.
The marijuana industry is posing a challenge for the IRS, which is having a hard time collecting taxes on transactions in states where medical and recreational use is legal.
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During testimony before House lawmakers on Wednesday, Mnuchin said there is fallout from discrepancies that exist between state and federal laws regulating the industry.
“From the IRS’ standpoint, this creates a very large concern, and we have to build cash rooms to take in large amounts of cash where people owe us taxes, because we want to collect the taxes and those entities are not banked,” Mnuchin said. “And I would say that creates risk to our IRS employees and to the people in the community.”
The question came from Democratic Florida Rep. Charlie Crist, who said the state’s medical marijuana market is forced to operate in all-cash because of the incongruity between federal and state laws.
The main issue is: The industry remains unbanked because financial institutions are not sure whether doing business will put them in violation of federal finance and anti-money laundering laws even as states legalize cannabis for medical and recreational use.
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Regulations put into place under the Obama Administration had broadly allowed banks to deal with the industry, but the guidance allowing them to do so was revoked by former Attorney General Jeff Sessions. The Trump administration’s stance is still being worked out.
The House has passed a bill known as the SAFE Banking Act in September, which would allow financial institutions to provide financial services to legally operating marijuana businesses and to businesses that serve marijuana businesses. The bill, however, has not made headway in the Republican-controlled Senate.
Mnuchin declined to make a policy-based statement on the issue, which he noted was not in his “lane,” but he said Congress should act one way or the other.
Nevada Rep. Mark Amodei called tax collectors, including the IRS, “the biggest launderers” of marijuana money for states where it is currently legalized.
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