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 Current federal law prohibits banks from processing money used in
the legal marijuana industry, even state-licensed medical marijuana
in Illinois. This makes it difficult for businesses to secure loans
and restricts customers to cash-only transactions.
The legal marijuana industry has operated with limited confidence it
will not face criminal prosecution after President Barack Obama’s
Justice Department stated it would not prioritize the enforcement of
federal marijuana laws knowing that many states have legalized some
marijuana use.
Today, Frerichs sent President Trump a letter encouraging his
administration’s assurance that responsible financial institutions
will not face penalties or prosecution for conducting business with
state-licensed marijuana cultivators and dispensaries. This clear
guidance would provide the confidence needed to support the
fledgling industry and protect medical marijuana users.
 “Medical marijuana is not right for everyone. However, its positive
results for those with debilitating conditions, including Veterans
and children threatened by seizures, are undeniable,” Frerichs said.
“Updating our banking laws to embrace commonsense change will allow
Illinois to properly manage this reasonable program, guarantee
uninterrupted access to medical users, and protect financial
institutions that serve the industry.”
This guidance is particularly important when considering that
President Trump’s nominee for attorney general is Jeff Sessions, the
U.S. Senator from Alabama. As attorney general, Sessions would have
the authority to change President Obama’s directive and instead
prioritize marijuana-related inquiries. Previously, Sessions called
marijuana “dangerous” and has criticized President Obama for not
being tough enough on marijuana.
Today, most refuse to provide banking services to those in the
medical marijuana industry while smaller community banks do so with
great trepidation. The lack of full engagement hobbles the industry
despite the availability of marijuana in 27 states. Further, the
cash-reliant business practice makes it difficult to properly audit
sales, confirm that the appropriate tax amount is remitted to state
coffers, and invites criminal activity at retail locations.
Few Illinois residents realize that Illinois’ Medical Cannabis Pilot
Program is in a testing stage and authorization sunsets in 2020. The
Trump administration’s approach to banking services plays a critical
role in the future availability of medical marijuana in Illinois and
will be a strong consideration when lawmakers decide to expand or
kill the pilot program.
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Medical marijuana taxes and fees are remitted to Frerichs’ office for
investment. Consumer sales are taxed at the 1 percent pharmaceutical rate.
Additionally, there is a 7 percent privilege tax imposed on cultivation centers
and dispensaries. Ordinary payroll and income taxes also are paid.
According to the Illinois Department of Public Health, it approved approximately
14,700 applications to use medical marijuana since the Medical Cannabis Registry
opened on Sept. 2, 2014. There are 49 licensed dispensaries in Illinois. Total
retail sales since the first sale is $37.9 million. Total wholesale sales since
the first sale is $23.3 million. Illinois has collected $15.7 million in
licenses, taxes, and fees.
Illinois first began selling medical marijuana in November, 2015.
About the Illinois Treasurer
The Illinois Treasurer is the state’s chief investment officer and Frerichs is a
Certified Public Finance Officer. He protects consumers by encouraging savings
plans for college or trade school, increasing financial education among all
ages, and removing barriers to a secure retirement. As the state’s Chief
Investment Officer, he actively manages approximately $25 billion. The portfolio
includes $13 billion in state funds, $7 billion in college savings plans and $5
billion on behalf of local and state governments. The investment approach is
cautious to ensure the preservation of capital and returns $28 to the state for
every $1 spent in operations. The Treasurer’s Office predates Illinois
incorporation in 1818. Voters in 1848 chose to make it an elected office.
[Illinois State Treasurer Michael
Frerichs]
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