Marijuana becomes aboveground commerce
In Manhattan this week, the New York State Society of Certified Public Accountants held something called a “Marijuana Symposium: Business, Tax and Legal Implications.”
Nothing gives a stronger sense that this industry is here to stay than professional meetings on how accountants can keep businesspeople out of trouble.
“As the marijuana industry continues to grow rapidly, as well as generate jobs and profits, CPAs have been asked to provide their services to businesses that cater to the ever-growing medical marijuana industry,” said a statement from the Society. “Given the disparity between federal and state marijuana legalization, the [Society’s] Marijuana Symposium will inform attendees on how best to navigate this burgeoning industry.”
Speaking to the symposium was New York state Sen. Diane Savino, who sponsored the state’s medical marijuana law.
Most states have now loosened their marijuana laws either for medical or recreational use. Most states is just what some Nevada leaders were waiting for. The question has been asked for years why Nevada—with its long history of legalizing things like prizefighting, gambling, and small-county prostitution—was not one of the first states to embrace legal marijuana (“Has Nevada lost its nerve?” RN&R, July 14, 2011). For years, many officials said Nevada’s past outlaw reputation meant the state has greater difficulty luring more respectable industries to the state and should not go after marijuana for fear of driving off, say, alternative energy or high tech firms. In its early days, Nevada wanted any commerce it could get. Later, when it could compete for major corporations, legitimacy become more important.
Now, however, with 29 states facing the federal government down on marijuana, Nevada has plenty of company and even if state leaders were still reluctant, initiative petitions enabled residents to go around state officials, first on medical marijuana and now on recreational marijuana.
In a meeting of the American Advertising Federation at the Atlantis in Reno before the election, advertising sales people were briefed by Nevada Medical Marijuana Association spokesperson Will Adler on what was possible under the law at the time and what might be possible if Nevada ballot Question Two passed in November—as it did. Now begins careful planning on how to go about promoting the industry.
Such businesses face problems others do not. Some marijuana companies are toying with creating digital currency, necessary because federally-chartered banks are reluctant to get involved with businesses that remain illegal under the still-head-in-the-sand federal government. One of them is Cannabis Revolution, a Colorado firm that is also operating in Nevada.
“It’s just because we’re overseen by the FDIC [Federal Deposit Insurance Corporation],” said Heritage Bank of Nevada president Stan Wilmoth. “They are not encouraging or discouraging us, but they make clear that they prefer we stay out of the field.” He said Heritage has had to turn away marijuana businesspeople seeking financing. “We have no political cover,” he said.
There are still misconceptions that can lead some companies and jurisdictions astray. The view that marijuana dispensaries can harm property values has taken a couple of hits lately—studies by the University of Mississippi and University of Nevada, Las Vegas, showed residential housing property values near dispensaries enhanced several percentage points.
A Northern Nevada Business Weekly piece by Valerie Clark tends to discuss marijuana in “safety” terms that suggest it raises the same employer/employee issues as booze—“If they’re not allowed to carry half pints of lime vodka in their pockets, they shouldn’t be be allowed to carry packets of marijuana, either. … And some employees who never have faced a bit of trouble with legalized alcohol might find themselves getting into deep water with the recreational use of marijuana.” In fact, the effect of marijuana on humans is very different from alcohol. For instance, many people become more belligerent while drinking but most people become less belligerent while toking. The notion that the two substances should be regulated the same or treated similarly by employers overlooks those differences.The Trump factor
Gambling regulators are also digging in their heels with the federal government. The approval of ballot Question Two has not changed a 2014 state policy that tells casinos, “Unless the federal law is changed, the board does not believe investment or any other involvement in a medical marijuana facility or establishment by a person who has received a gaming approval or has applied for a gaming approval is consistent with the effective regulation of gaming. Further, the board believes that any such investment or involvement by gaming licensees or applicants would tend to reflect discredit upon gaming in the state of Nevada.”
Casinos have had difficulty parsing that policy, arguing they cannot know what customers are doing in their hotel rooms or what they are high on at gambling tables. Question Two advocates have little sympathy for the casinos, noting that not only did the gambling lobby oppose the ballot measure this year, but used its lobbyists to override a voter-approved anti-smoking initiative petition at an earlier legislature.
There is another concern that lies ahead for marijuana businesses. The Obama administration had a policy of keeping hands off states that approved them. Not all U.S. attorneys in the states obeyed that policy, but most did, including Nevada’s U.S. Attorney David Bogden.
But Donald Trump has been imprecise on the issue. He told the Washington Post, “In terms of marijuana and legalization, I think that should be a state issue, state-by-state. … Marijuana is such a big thing. I think medical should happen—right? Don’t we agree? I think so. And then I really believe we should leave it up to the states.”
But he has called legal marijuana in Colorado a “real problem” and his attorney general-designate, Jeff Sessions, is a prohibitionist who said in April, “Good people don’t smoke marijuana.”