Although eight states and the District of Columbia will now allow adult recreational use of marijuana and another 20 states will permit marijuana to be used for medical purposes, the industry is still being stymied in its efforts to access banking services. Since cannabis remains a Schedule I substance under the Controlled Substances Act of 1970, a classification that also applies to heroin, LSD and ecstasy, financial institutions fear that dealing with marijuana establishments will expose them to highly punitive measures. Facilitating monetary transactions in marijuana, if determined to be money laundering, could be fined at twice the amount laundered and accompanied by a 20-year prison sentence.
In light of this unsatisfactory state of affairs, Singlepoint, Inc. (OTC: SING) welcomed the recent request (http://nnw.fm/qBH4k) to the Financial Crimes Enforcement Network (FINCEN), by 10 senators, for further guidance ‘to financial institutions on their ability to provide services, specifically to indirect businesses that do nothing more than provide services to the state-sanctioned marijuana industry’. The letter set out three reasons why it makes sense for marijuana shops to have bank accounts: it makes the collection of state and federal taxes easier; it makes it more difficult for criminal elements to be involved in the industry, and less cash means less likelihood of armed robberies.
The senators’ letter contained a litany of woes assailing the industry, pointing out that the guidance issued by FINCEN in 2014 applied only to ‘state-legalized marijuana businesses and the financial services industry’. It did not address the plight of ‘the indirect businesses that service the marijuana industry, leaving it up to individual financial institutions to determine how to classify and treat indirect businesses’. As a result, ‘less than 3% of the nation’s 11,954 federally regulated banks and credit unions have chosen to serve the cannabis industry’.
As far as tax revenues are concerned, there’s a lot at stake. Before Colorado legalized the adult use of marijuana, state authorities projected tax revenues of $70 million per year. Actual revenues have far exceeded that. In 2015, $113 million in retail marijuana tax revenues were collected on sales of $568 million. Marijuana tax revenues were, actually, twice those of alcohol taxes in 2015. In 2016, they may end up being four times as much.
The story is much the same in Washington State. Statewide sales of marijuana for adult and medicinal use were running at a rate of $2 million daily, or about $730 million per annum, in April 2016. If that rate has kept up, tax revenues from marijuana will be in the vicinity of $270 million for 2016.
The legal market for marijuana is now estimated at about $7 billion, while the black market is thought to be around $50 billion. Tax rates vary from state to state, but even a modest 20% rate on such a huge market will provide a substantial boost to state budgets.
Through its SingleSeed subsidiary, Singlepoint, Inc. is prepared to offer payment solutions for the cannabis industry. Its mobile marketing and payment solutions include cashless ATM, Pay-by-Text™ and text message marketing.
For more information, visit the company’s website at www.Singlepoint.com
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