Marijuana Dispensaries’ CU Accounts Raided by Feds
Federal agents have seized the accounts at a Sacramento-area credit union of two businesses that dispense marijuana to people with a doctor's prescription, according to court documents.
The two dispensaries were the Mary Jane's Wellness in Gold River, Calif., and the One Love Wellness Center in Sacramento, Calif. Each had money in business accounts at the 151,000-member, $1.8 billion SAFE Credit Union, headquartered in North Highlands, Calif.
According to the two warrants that authorized the move, the two firms together had about $225,000 subject to seizure, just over $145,000 from Mary Jane's Wellness and just over $79,000 from One Love Wellness' parent company, River City Cooperative.
Neither the dispensaries nor the credit union has commented on the seizures. One Love Wellness said it would refer press inquiries to its attorney, but as of press time, the attorney had made no comment.
According to Heidi Gutierrez, a task force officer with the Internal Revenue Service's Criminal Investigation Division, both organizations could be seized because, she alleged, both had likely been involved in “structuring” account deposits to avoid Federal currency reporting rules, specifically currency transaction reports.
CTRs are required anytime someone deposits more than $10,000 in cash in an account at a financial institution under certain rules. Structuring is defined as making deposits of less than $10,000 in order to not trigger CTR reports.
In her sworn affidavit in support of the warrants, Gutierrez alleged Mary Jane's Wellness had made a series of deposits between July 1 and July 30, often in series of two or three days at a time, which totaled more than $10,000. Further, the deposits were made in three different SAFE CU branches.
Gutierrez also alleged that the parent company of One Love Wellness made, on at least eight occasion between June 28 and July 1, deposits on the same day, within minutes of each other that in aggregate totaled more than $10,000. “I believe there is probable cause to believe the transactors were aware of the CTR filing requirement and were purposefully depositing amounts less than $10,000.01 to structure cash deposits in violation of 31 USC 5324(a)(3),” Gutierrez wrote.
Legal experts on medical marijuana contacted would not comment on the case, but one consultant noted that the regulatory atmosphere for legal medical marijuana dispensaries had only been getting more difficult.
“What we are finding is that the Treasury Department and other government agencies have been sending letters to banks and other firms which do business with medical marijuana dispensaries and warning them about the business,” said Scott Rosenfeld, accountant and owner at Rosenfeld and Co., a Los Angeles firm that consults with medical marijuana dispensaries.
He also noted that the issue goes beyond banks to the payment card brands as well. Visa and MasterCard have been threatened, he said, to get them to stop providing payment service to medical marijuana dispensaries that are legal in their states. This has also extended to firms providing support to the businesses, he said, citing his own experience selling a series of manuals, “How to Open a Medical Marijuana Dispensary.”
“Even though we are not a dispensary and had three years of solid business with them [selling the manuals online], Visa said they could no longer do business with us.”
He also observed that medical marijuana dispensaries need to be even more transparent and open with their bankers about their business. If the firms have trouble getting a merchant account to take payment cards, that meant much if not all the business would be in cash.
That represents a lot of cash to have on hand and might mean that a dispensary might make several trips a day to the bank to make deposits and might need to alert the bank or credit union about their needs.
Rosenfeld noted that the matter seems headed to court as a state's rights question, as the medical marijuana dispensaries are legitimately licensed businesses from which the states expect much needed tax income. If the businesses cannot obtain banking services and wind up moving off the books, that could influence their ability to pay their taxes and supplement much needed state revenue, he said.
“Ultimately, the citizens of these states have reaffirmed these businesses, whether the federal government likes it or not,” he said. “I expect at some point they will need to start defending their licensed businesses ability to operate without bogus federal interference,” he added.