Industry descends on DC for pro-pot push

Marijuana activists are descending on Washington this week to lobby Congress for more favorable drug laws in what promises to be one of the emerging industry’s biggest pushes yet.

Hundreds of people who sell marijuana from around the country will press lawmakers to legalize the drug so they can move forward as legitimate businesses with better access to credit and tax breaks.

The pot push comes as part of the industry’s fly-in lobbying day Wednesday organized by the Marijuana Policy Project (MPP) and the National Cannabis Industry Association (NCIA).

“They’ll be talking to members of Congress about the benefits of taxing and regulating marijuana as opposed to criminalizing the use of pot,” said Dan Riffle, the MPP’s director of federal policies.

The festivities also include the MPP’s 20th anniversary gala and a business summit hosted by the NCIA.

The ArcView Investor Group is also bringing in a group of venture capitalists later in the week to meet a number of marijuana companies in the early stages of development.

“Money talks in politics,” said ArcView co-founder Troy Dayton. “I think the political perception about pot changes when lawmakers see serious investors getting into the legal cannabis industry.”

All of these groups are encouraging their members to take part in the lobbying day, when activists will make their case to legalize pot in private meetings with about 100 lawmakers, including Reps. Earl BlumenauerEarl BlumenauerOvernight Finance: House GOP grills IRS chief on impeachment | Bipartisan anger over Iran payment | Fed holds rates steady but hints at coming hike Panel votes to extend nuclear power tax credit DEA decision against reclassifying marijuana ignores public opinion MORE (D-Ore.), Jared Polis (D-Colo.), Steve Cohen (D-Tenn.), Dana Rohrabacher (R-Calif.), Jared Huffman (D-Calif.), Ed Perlmutter (D-Colo.) and Del. Eleanor Holmes Norton (D-D.C.). 

“We’re asking for our businesses to be treated fairly,” said Taylor West, deputy director of the NCIA.

A number of states have legalized medical and recreational marijuana, but the laws run in conflict with the federal prohibition on pot.

The contradicting statutes are the source of much confusion, activists say, and force marijuana businesses to operate on a semi-legal basis, with the threat of federal prosecution lurking around the corner.

The activists are looking for Congress to remove marijuana from a list of federally banned drugs, among other legislative steps to support the industry.

“Right now, we are still in a world where marijuana laws are changing state by state, and the simplest way for Congress to move forward is to leave the decision up to the states,” West said.

Among them is a bill, expected to be introduced by Perlmutter this week, that would give marijuana businesses greater access to the banking system.

Banks are essentially prohibited from doing business with marijuana dealers, because it could be considered money laundering, Riffle said.

Some lawmakers are hoping to resolve that issue. The Marijuana Businesses Access to Banking Act expected to be introduced Thursday by Sen. Jeff MerkleyJeff MerkleyOvernight Healthcare: Top ObamaCare lobbyists reject 'public option' push | Groups sound alarm over Medicare premium hike Top ObamaCare lobbyists reject 'public option' push Liberal groups urge Schumer to reject Bayh for Banking gavel MORE (D-Ore.) and Perlmutter would give these companies greater access to financial services, as long as they operate in states where pot is legal.

In the meantime, some pot shops are taking “creative measures,” secretly opening bank accounts without identifying the true nature of the business, but many others are forced to operate on a cash basis.

Riffle called it a “serious public safety issue.”

Stores that operate on a cash basis are an easy target for robberies, putting employees and customers at the dispensaries at risk, he said. 

And those pot shops that secretly open bank accounts risk having their assets frozen and losing their money if they are discovered.

“It’s not a sustainable business model,” said Salwa Ibrahim, executive director of Blum, a dispensary in Oakland, Calif., who is in town lobbying lawmakers this week. “Something has to give at some point, and that’s what we’re trying to tell lawmakers.”

Julianna Carella, founder of Auntie Dolores, a company that makes edible marijuana treats, faced difficulties paying employees when her bank account was shut down.

“The bank actually took all of our money and didn’t give it back for four months,” said Carella.

Other marijuana businesses report similar actions, and haven’t seen their money returned.

“There is not a lot of recourse in this industry since it is not legal at the federal level,” Carella said.

Marijuana businesses say they want to contribute their fair share of taxes, but they struggle to do so without a bank account from which they can write checks.

“It’s not like we can send cash to the IRS,” Ibrahim joked.

Furthermore, pot shops do not qualify for a number of tax breaks that other companies typically claim, making it difficult for them to compete. 

Federal law prohibits drug dealers from deducting business expenses like rent and salary from their taxes. The rules leave legitimate pot businesses paying an effective tax rate as high as 75 percent to 80 percent, according to West.