Reefer Madness!

December 14, 2016 at 9:57 am Leave a comment



Yesterday, I contributed my 2 cents to a symposium hosted by New York State’s society of CPA’s exploring issues related to medical marijuana. Just as the uncertainty about what is and is not appropriate for credit unions and banks to do has deterred the financial industry from actively engaging with marijuana businesses, think of how confusing it is for accountants working with businesses that are paying taxes on a product that is illegal under federal law.

The Trump administration has to move  early and decisively to clarify this current state of affairs: it is having serious consequences that should no longer be ignored.

First, New York truly has a medical marijuana model. It can only be prescribed by medical professionals who undergo additional training; the patients have to have qualifying ailments; the marijuana can’t be made available in an  inhalable form and it  can only be sold from a limited number of locations.

These are not cynical restraints. One of the persons at  the symposium was Hillary Peckham, Chief Operating Officer, Etain Health located in the Lake George area of upstate New York.  Her business doesn’t cater to Baby Boomers and Gen-Xers out to relive the glory days. It helps people dying of cancer and kids who suffer from seizures.

I will leave it up to the medical experts to debate how helpful marijuana is and can be. What I now believe, however, is that  New York’s medical model is encouraging legitimate businesses and entrepreneurs who truly believe in the medical benefits of marijuana and who have legitimate banking needs.

Nevertheless businesses like Etain Health are running smack up against Federal Law which continues to make the possession and distribution of marijuana illegal for all purposes.  Credit unions and banks are dealing with seemingly  contradictory signals from  regulators which can change as quickly as a new Attorney General is appointed. As I have explained in previous blogs, on the one hand, Fincen and the Justice Department have issued memos explaining to financial institutions the conditions under which they can provide services for marijuana business in states where they are legal. On the other hand, the Federal Reserve and NCUA blocked a state chartered credit union in Colorado from obtaining access to the Federal Reserve System. In addition, there are bankruptcy courts questioning the status of business estates which include marijuana businesses and federal courts which are questioning the enforceability of contracts with them.

This “don’t ask” “don’t tell “ state of affairs, in which states are allowed to “legalize” marijuana while the federal government selectively chooses to look the other way is reaching the  breaking point.  It is time for the Federal Government to get serious and allow both credit unions, banks and these legitimate businesses to  come out of the shadows.

Entry filed under: General. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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