1. The federal government says marijuana is illegal.
Marijuana is classified as a schedule 1 drug by the federal government. Schedule 1 means it has no “currently accepted” medical use and “high potential” for abuse. It is grouped with heroine and peyote.
2. States have said that marijuana is legal.
Recreational marijuana is legal in nine states. Meanwhile, Washington, D.C.and 30 states permit medical marijuana. Elsewhere marijuana is “fully illegal”:
3. Marijuana sales are way up.
People are smoking marijuana, sipping marijuana-infused drinks, and eating marijuana edibles. Because producers are concerned with branding, they are selecting catchy names like Chocolope (with “rich yet dry cacao notes”). Sales have steadily gone up:
4. States receive considerable revenue from marijuana sales.
Marijuana businesses pay state taxes. They create jobs. In Colorado alone, during 2017, state coffers received $247 million from cannabis taxes, fees, and licenses.
5. Most banks refuse marijuana-related money.
It is a hassle for a bank to deal with a marijuana firm. Because federal law says that marijuana-related activity is “suspicious,” each transaction requires a report. As a result, most banks refuse to open marijuana industry accounts. The result? It’s a cash business.
6. The U.S. GDP underreports legal marijuana production.
Curious about whether federal statistics would include marijuana, I called the Bureau of Economic Analysis (BEA) in Washington D.C. They said the marijuana data that was in state GDP numbers was slowly entering federal totals. At the time though, it was minimal.
Our Bottom Line: Financial Intermediaries
Including commercial and investment banks, credit unions, and pension funds, financial intermediaries enable businesses to invest and expand. They let households finance new homes and buy cars. We need banks for deposits, for credit and debit cards, for cashless transactions.
My sources and more: Marijuana money problems are described everywhere. If you would like to read more about financial regulation, do look at Brookings. But for the whole picture, a Vox explainer has the perfect overview. Finally, here is Colorado tax info, federal drug classification, and more from Quartz. (I should add a description of the frenzy surrounding Tilray, a Nasdaq listed marijuana stock.)
Our featured image is from the AP via Quartz.