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When does too much cash become a health risk? When you own a marijuana shop

Stuart Leavenworth, McClatchy Washington Bureau on

Published in News & Features

Marijuana proponents say a change in federal banking laws would protect public safety, but opponents are pressing members of Congress to reject the SAFE Banking Act.

"This chaos is all so predictable," said Carla Lowe, founder of Citizens Against Legalizing Marijuana, one of the groups that fought the 2016 passage of Proposition 64, California's legalization initiative. "This industry is a lawless industry. ... All of their money is illegal, and it should stay illegal."

The cannabis industry's reliance on cash is also complicating tax collection efforts. In California, Proposition 64 was sold to voters with the projection it could generate more than $1 billion yearly in state and local tax revenues.

Yet for government agencies, it is harder to track sales from all-cash businesses than it is for those who rely on credit cards, and it becomes tougher still when those businesses can't use banks. To pay their taxes in Sacramento, some 30 city-approved marijuana shops have to stuff cash into backpacks and duffel bags and haul it to a set location each month, kept secret for security reasons.

"It is a far-from-ideal setup," said Joe Devlin, Sacramento's chief of cannabis policy and enforcement. "When someone comes in to pay a parking ticket in cash, that is one thing. When someone is coming in paying $30,000 in taxes, it is something else."

Over the last decade, the cannabis industry has devoted much of its political spending toward passage of state legalization and medical marijuana laws. It helped raise $25 million in support of passing Proposition 64, compared to only about $2 million raised by opponents.

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Inside the D.C. beltway, the money influence is reversed. Opponents of marijuana legalization -- such as the National Fraternal Order of Police and other law enforcement groups -- spend millions of dollars each year on lobbying and campaign contributions, far more than pro-cannabis groups, such as the National Organization for the Reform of Marijuana Laws.

One of the most powerful opponents of marijuana legalization is casino magnate Sheldon Adelson, who has spent more than $190 million since 1989 on contributions to presidential candidates and members of Congress, nearly all of them Republicans, according to the Center for Responsive Politics.

The industry is working hard to enhance its clout in Washington, but it hasn't been easy, said Khurshid Khoja, a California lawyer who represents numerous cannabis businesses.

"It's only in the last few years we haven't been treated like a joke," said Khoja, founder of Greenbridge Corporate Counsel. During past lobbying days at the Capitol, he said, cannabis industry advocates could only meet with staffers in the hallways, and routinely had to endure quips about being the "stoner" lobbyists.

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