This quote from the article is the crux of the issue. Even state public banks who knowingly accept proceeds from an illegal activity are guilty of money laundering (technically). Every bank or CU needs a federally issued master account in order to transfer money across institutions. Without this, you really don’t have a bank in the modern sense.
When Colorado tried to create a credit union for the marijuana industry there, “the Fed denied the credit union access to a master account, which is necessary for transferring money, and the National Credit Union Administration refused to insure its deposits,” the nonprofit Pew Charitable Trusts noted.
That’s some catch, that catch-22…It’s the best there is.
A common mistake. Even the government has the authority to refuse cash payments and accept wire transfers or checks (personal or cashier’s). The whole “all debts public and private” thing written on your currency is not legally binding.
This sort of topic really brings home to me that I have no clue about how the US constitution works.
So a state can declare the sale of a substance legal within its territory even if the Federal government has declared it illegal. Fine. Weird but ok, I can sort of grasp that.
Somehow even though the money generated from those sales is generated from a perfectly legal activity, it still constitutes some sort of offence to accept deposits of that money?
Is that right?
Or is this one of those, ‘we’re worried that the rules might change at some point and then we would be in trouble so it’s just easier for us to ignore this money and hope the industry goes away’ situations?
Yes. Most collectives are paying state and federal taxes. You just have to effectively say “I brought in this much revenue. I spent this much. And here is your cut based Mr Taxman”, using the formal wording of an affidavit. Then you need to bring your payment to the tax office without using federal banking wire transfer system. What is unclear is if you use third parties that accept cash (as is IRS policy!). Theoretically it would save Californian marijuana collectives a trip to Fresno. (I don’t run a collective, so I don’t really know for sure of these details)
PS - individuals, who frequently get tax refunds, are out of luck when it comes to bank accounts. You have to have a bank account to get your refund.