Pot company CEO paid $3M tax bill in cash, report says
How’d you like to carry around a cool $3 million?
John Lord, the CEO of Colorado marijuana retailer LivWell Enlightened Health, said he had “no choice” but to bring $3 million in cash to his local IRS office to pay federal taxes because of provisions that scare banks off from working with pot companies, MarketWatch reported.
During a Senate panel hearing this week about a bill that would protect banks that work with legal marijuana businesses, Lord also said he once rented out a former bank so he could use its vault for storing his company’s cash, according to the report.
The issue is related to the incongruity between federal law and the laws of the growing number of states that have legalized medical or recreational marijuana. Banks are afraid of being punished for dealing with money that’s tied to something the DEA still considers a Schedule I drug.
That’s put marijuana businesses like Lord’s in a tight spot. In a recent FOX Business op-ed, American Bankers Association CEO Rob Nichols and Credit Union National Association CEO Jim Nussle wrote that cannabis businesses are forced to store cash in backroom safes, carry it in backpacks and use it for payroll — making them prime targets for theft.
A study from the Wharton School at the University of Pennsylvania found that one in two cannabis dispensaries were robbed or burglarized in 2015, with thieves typically making off with between $20,000 and $50,000.
“This isn’t just a cannabis industry problem, the ripples of this legal divide have the potential to disrupt the day-to-day business of our local economies, and hardworking small business women and men who already face enough competitive pressures in running their enterprises,” Nichols and Nussle wrote.
Lawmakers have proposed a bill that would create protections for banks that provide services to legitimate cannabis-related businesses and those who provide services for those businesses. The so-called SAFE Banking Act has bipartisan sponsorship in Congress and the endorsement of attorneys general from 33 states.
But opponents of the proposal, like Garth Van Meter from the group Smart Approaches to Marijuana, said it would have “massive public health ramifications,” MarketWatch reported. And with only so-so support from Republican lawmakers, the bill’s prospects remain iffy.
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Proponents of the bill have said it wouldn’t just help the businesses currently operating in cash — it would also make their finances more transparent, allowing banks and law enforcement to catch any wrongdoing.