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Ohio voters will decide Nov. 3 whether to approve Issue 3, which would legalize marijuana for personal and medical use.
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Money laundering concerns prompt Ohio banks to weigh in on legal pot

Oct 8, 2015

 

Cincinnati Business Courier -   The board of the Ohio Bankers League voted to oppose legalizing marijuana, citing concerns about money laundering.

Ohio voters will decide Nov. 3 whether to approve Issue 3, which would legalize marijuana for personal and medical use.
 
The proposed constitutional amendment was drafted by ResponsibleOhio, a political action committee. Issue 3 would permit 10 marijuana farms. Each would be owned by one of 10 investment groups, which contributed $2 million apiece to fund the PAC’s $20 million campaign to legalize pot. Investors include prominent Cincinnatians such as Frank Wood, CEO of the venture capital firm Secret Works.
 
The Columbus-based trade association has 210 members, including Cincinnati-based Fifth Third Bank and other local financial institutions such as Cheviot Savings and Cincinnatus Savings and Loan.
 
“Marijuana is illegal at the federal level, and handling proceeds connected to marijuana-related businesses also remains illegal – regardless of state law,” said Mike Adelman, CEO of the Ohio Bankers League. Issue 3 “would put the Ohio banking industry in an untenable position and would render the marijuana industry an all-cash business, creating public safety issues and money laundering concerns.”
 
If federally insured banks accepted marijuana-related businesses as clients, the financial institutions could be in violation of the U.S. Controlled Substances Act, the Bank Secrecy Act, the Patriot Act and the Racketeer Influenced and Corrupt Organizations Act, Adelman said.
 
Issue 3 wouldn’t require Ohio banks to accept deposits or make loans to marijuana-related businesses, said Ian James, executive director of ResponsibleOhio. He has said that legalizing marijuana could result in a $4.1 billion Ohio industry by 2020.
 
“When the federal government inevitably expands their view on revenue from the marijuana industry, we hope OBL will rethink their position on this multibillion-dollar industry and this isn’t just a guise for an anti-marijuana agenda,” James said.
 
David Bastos, a ResponsibleOhio investor who is a partner in Cincinnati-based real estate developer Capital Investment Group, told me that financial institutions are allowed to accept proceeds from marijuana businesses – but the federal procedures involved are onerous.
 
The Bankers League joined a growing number of business-related groups opposed to Issue 3, including the Cincinnati USA Regional Chamber, the Ohio Chamber of Commerce and the Ohio Society of CPAs.
 
The board of the Bankers League also voted to support Issue 2, which was crafted by state lawmakers to derail the ResponsibleOhio proposal. It would prohibit ballot measures that would “grant or create a monopoly, oligopoly or cartel.”
 
"The Ohio banking industry has a long history of promoting free market enterprise and embracing economic competition in communities across the state,” Adelman said. “State Issue 2 supports this long-standing mission.”
 
ResponsibleOhio said the claim that Issue 3 would create a monopoly is false. It would permit up to 1,150 retail stores and unlimited marijuana production facilities, testing facilities and medical dispensaries. The proposal also would allow Ohioans 21 or older to obtain a license to grow up to four plants at home, but those individuals wouldn’t be allowed to sell marijuana.
 
The nonprofit Ohio Bankers League consists of FDIC-insured financial institutions, including banks and savings & loan associations ranging in size from $13 million in assets to more than $2.5 trillion.
 
 

“If you choose to consume, please do so responsibly.”

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