A group that opposes marijuana is targeting a bank arrangement between Wells Fargo, the state of Maryland and officials who receive and process the tax revenue from state-legal cannabis businesses. They call the arrangement “an active attempt to protect banks who break federal law”, and are trying to alert federal officials.
The state has stated that it “complies” with all applicable laws and regulations.
Smart Approaches to Marijuana, which is opposed to marijuana legalization, made these allegations in a late-last-month press release following reports in the media about the banking arrangement. This included in Marijuana Moment.
The group also sent an open message to Maryland officials and Wells Fargo while adding several federal officials as CCs, asking that “Wells Fargo stop working with Maryland state officials in order to circumvent federal law and regulations.”
The letter from the prohibitionist group says that “the workaround by Maryland’s government, reported in the media, is a clear effort to protect banks against thoughtfully crafted Federal regulations.”
The letter was copied to Erek Barron, U.S. Attorney for Maryland. His office would be responsible for any federal prosecutions that may occur in Maryland. Also included were Merrick Garland, Attorney General, and Janet Yellen, Treasury Secretary.
MARYLAND-WELLS FARGO DRUGS MONEY PARTNERSHIP MERITS MORE SCRUTINY
Read about it here: https://t.co/LMoKFvVZ00 pic.twitter.com/FlWp0wEkdm
SAM (@learnaboutsam August 28, 2023
Kevin Sabet, President and CEO of SAM, called the situation in a prepared press release “a slippery path that should deeply concern Marylanders.”
In the press release, he stated that “By allowing banks access to marijuana revenue linked to an increased drug use and addiction crises, Maryland opens the door to other illicit substances.”
Rob Scheerer of the Maryland Office of the Comptroller’s Revenue Administration Division made comments last month that prompted the attack. He said at a county government conference that , “to protect the banks we can’t call this cannabis on a tax return.” But he also added that “we have cleverly called this “A sale subjected to the 9 percent rates under Senate Bill 506 of 2023.”
The state Comptroller’s Office sent the following email after a Marijuana Moment report on Scheerer’s remarks:
Maryland’s Comptroller’s Office collects sales and usage tax for all taxable products and services, including adult use cannabis. This was approved by the Maryland legislature and voter referendum in 2023. A 9% tax is now imposed on adult use cannabis sales.
Wells Fargo Bank offers lockbox services and other treasury services to Maryland. These services include services related to state tax collection. State officials and Wells Fargo have taken all necessary steps to ensure that Maryland’s sales and use taxes are collected and that the State is handling the tax revenue in accordance with the applicable laws and regulations. “Any inference or assertion claiming that these processes were designed to evade applicable laws or regulations, is incorrect.”
There’s no indication that state officials have responded to SAM ‘s Open Letter . On Tuesday, a spokesperson for the Comptroller’s Office told Marijuana Moment that there were no other comments.
Gabriel Boehmer, a spokesperson for Wells Fargo told Marijuana Moment that the bank sent a response letter to SAM & Sabet in the last week. Boehmer, a spokesperson for the company, sent what he described as an excerpt from the letter.
It says: “Recent media stories that we worked with the State of Maryland in order to bank the marijuana business are false.” “We provide certain service to the State Maryland in relation to the State’s tax collection.”
The statement then refers to the earlier Maryland comptroller’s statement.
SAM’s executive Vice President told Marijuana Moment on Tuesday that the group had not received a response from Wells Fargo to its letter.
It is important to note that neither Maryland Matters nor Marijuana Moment, who first published Scheerer’s comments on tax handling, reported Wells Fargo providing banking services directly to cannabis businesses.
Banks and credit unions may be penalized by federal banking regulators if they work with cannabis businesses. This is because marijuana is still illegal under federal law. According to the 1970 Banking Secrecy Act (BSA), money that is derived from federally illegal activities must be reported through a suspicious transaction report (SAR). Boehmer refused to give an official response when asked if Wells Fargo had filed SARs relating to Maryland cannabis tax revenues.
The Secure and Fair Enforcement Banking Act (SAFE), which was reintroduced in April for the current legislative sessions, aims to alleviate banking problems caused by state-federal conflicts over marijuana. It would give banks that do business with cannabis a safe harbor if it were passed.
In a speech on the Senate floor Tuesday, Senate majority leader Chuck Schumer reaffirmed his commitment to advance banking reform at the start of the new session after the August recess.
In a Dear Colleague note that was sent by the majority leader, he made similar points. He listed “safeguarding marijuana banking” after “lowering costs of insulin and prescription medications.”
Next, the Senate Banking Committee will mark up the bill. Advocates and stakeholders are hoping that this can be done within a few weeks.
The U.S. Department of Health and Human Services is now recommending marijuana be moved from Schedule I into Schedule III of Controlled Substances Act. This move would, amongst other things, allow state-licensed cannabis business to claim federal tax deductions.
Schumer, at a late-July press conference before the lawmakers went on recess, said that Senators were “making progress” in bipartisan discussions about the legislation, and predicted a “very productive fall in Senate.”
He said that the bill “has been a top priority for me” at the time. “There’s lots to do once we return.”
GOP congressman worries that moving marijuana to Schedule III could ‘allow Big Pharma to control it’
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