Legislative Report Projects $72 Billion Cannabis Industry By 2030

A new legislative report delivered to Maryland lawmakers this week projects that the nationwide market for legal cannabis could climb to $72 billion per year by 2030, more than double the current market estimation of $32 billion annually. But the report also shows that some states that have legalized cannabis have failed to set clear social equity goals and that the regulated marijuana market nationwide lacks a proportionate representation of Black-owned businesses.

Lawmakers in Maryland are exploring how legalized adult-use cannabis would impact the state, where voters will decide on recreational marijuana legalization in this month’s general election. On Tuesday, the Maryland House of Delegates’ Cannabis Referendum and Legalization work group met virtually to assess a report on the nationwide cannabis regulation climate.

A $75 Billion Industry

The report, which was prepared and presented to the work group by Mathew Swinburne, associate director of Network for Public Health Law-Eastern Region of Baltimore, includes information from New Frontier Data that projects steady growth of the nationwide market as current markets mature and new states are added to the roster of legal cannabis states. Growing from $32 billion in 2022, the projection estimates a total market nationwide of $72 billion by 2030. 

“We know that the cannabis industry is a profitable industry,” said Swinburne. “This is a new industry that is filled with economic opportunity and that opportunity is only growing,” he added. “Although this industry presents some significant economic opportunities, communities of color are missing out on this cannabis boom.”

Swinburne told the work group that jobs in the cannabis industry rose from about 321,000 in 2020 to approximately 428,000 a year later. However, the report also notes that 81% of cannabis businesses are owned by white people and 58% of businesses have no employees who are members of minority groups. 

Efforts to address the lack of diversity in the cannabis industry have been inconsistent, the report notes. Of the 19 states that have legalized recreational marijuana, Alaska, Maine, Montana, and Oregon do not have social equity measures in place to help improve equitable representation in the cannabis industry.

Swinburne highlighted some states’ approach to social equity, noting that Connecticut provides financial incentives for medical cannabis business owners to partner with new small or minority-owned businesses to provide assistance over a specified timeframe. Massachusetts provides accessible opportunities to enter the market by allowing courier and delivery operators to provide cannabis products directly to consumers. And in New York, regulators have created a $200 million fund to support social equity businesses and have prioritized those with past convictions for marijuana offenses for the state’s first 100 recreational cannabis dispensary licenses.

Delegate C.T. Wilson of Charles County, chair of the House Economic Matters Committee, asked Swinburne how taxation in other states with legal cannabis has impacted the illicit market and illegal marijuana sales.

“That’s a definite challenge states are confronted with,” Swinburne replied. “If your goal is to decrease the share of the unlicensed market, you have to keep your licensed market competitive. It’s important to highlight with the tax revenue you get, there’s a moral obligation to use some of that for addressing the harms that were caused [in low-income communities].”

Senator Melony Griffith of Prince George’s County asked if any states that have legalized recreational marijuana had implemented policies, such as a disparity study, that was required “to produce evidence of their race concise remedies,” but Swinburne said the report did not assess that issue in its analysis.

Maryland Voters To Decide On Legalizing Weed

In next week’s midterm election, voters in Maryland will decide on Question 4, a referendum that would amend the state constitution to legalize marijuana for adults 21 years of age or older beginning in July 2023. The measure also directs the state legislature to pass laws for the use, distribution, regulation, and taxation of marijuana. 

Currently, marijuana is legal for medicinal use in Maryland under a 2013 law, while possession of 10 grams or less of cannabis was decriminalized in 2014. Question 4 is overwhelmingly supported by Maryland voters, with a recent poll from The Washington Post and the University of Maryland showing 73% in favor of the proposal.

Voter Tamara McKinney of Prince George’s County told Maryland Matters that she plans to vote in favor of Question 4, but said she hopes the launch of the state’s recreational marijuana program will provide resources for Black and brown communities and those who have been incarcerated for cannabis-related offenses.

“De-criminalizing it helps keep our men out of the [criminal justice] system,” she said. “But if it helps to keep them out the system, what are we doing to keep them out [of jail]? I want them to have more resources than just the ability to get high.”

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Where Does The Money Go?

Lately I’ve found myself advocating for higher priced brands quite often, and one of the most common things I hear from consumers in response are things like ‘Damn, those guys must not care about their end users!’ Or ‘where do they get off charging so much for a 3.5 grams of flower?’ When Dante did his piece for WEIRDOS a few weeks back it had a similar reaction. While I do understand the sentiment, I’d like to set the record straight a bit, because I assure you, if they didn’t care about providing you with the best possible products they can, they simply wouldn’t be in this business.

You see, the reason you hear so much about brands trying to go ‘vertical’, or racing to scale, is because as it turns out, there’s not a ton of money in selling weed anymore. In order to optimize profits, and frankly make the business worthwhile, brands need to move a LOT of work, as this really isn’t a high margin business in the legal landscape. In fact, there are a million hurdles even the smallest of brands have to overcome to get their product to market. They are burdened with hard costs, a complicated legal system, and in truth, the initial cultivators often have the smallest say in terms of end price. They’re just trying to stay afloat.

My dear friend Drew Coggio, proprietor of Green Dawg Cultivators, said poetically of the state of the industry right now:

“Overall, the operators starve while the city eats. The state reaps while farmers weep.” 

This couldn’t be more accurate, and I’d like to illustrate the reality of the game today.

Reverse Engineering The Price

Let’s journey down the path of a top shelf eighth (and we’ll say it’s been sold at a fairly priced store – none of that hype shop noise – to keep numbers consistent) of a company that’s not fully vertical. To the end consumer in Los Angeles, when starting at $60 on the shelf, this equates to about $81 out of pocket when all is said and done. Sounds like a ton of money, right? The farmers must be making a killing! Well hold on now, not so fast.

That eighth had to be sold to a retailer, so as we travel backwards down the path, let’s see how that $60 shrinks. Because remember, that extra $21 is tax. None of the operators eat off that, that’s the states money. 

The retailer probably bought it around $30, as retailers typically mark products up about 100% (on the fair side). So we’re at $30 to the farmer, right? But what about the distribution company? They might have bought it for $15/per, and marked it up, because they also need to make money, and provide a living wage to their employees. So now we’re at $15 per eighth, for a product that’s sold to the consumer for $60 – margins are shrinking fast, but still, $15 for 3.5 grams, surely that’s a killing for the farmer. Right? Not when you factor in expenses, my dear!

Courtesy of High Times

Production Costs

Before we get into the costs of actually creating a viable grow room, there are a lot of hard costs in cultivation. Things like electricity, and water, are essential to the indoor grow process, and while these prices vary by where in the state you’re operating, I’ve spoke to a few friends in the process of writing this to generalize the costs.

Depending on the yields of your plants, an eighth can cost between $9-12 to grow indoors at the highest quality. Now, that price scales to the more expensive end as you factor in things like exotics are typically lower yielders, and that some plants take longer to finish. 

But remember, the cultivator is also being taxed here. The state will come in and take about 5% of gross sales from the cultivator on top of all the taxes the end consumer is paying. They have also been paying a ~$170/lb tax that was just recently lifted by California since so many cultivators have been going under, but it’s important to note that this extremely recent change has yet to be felt by the cultivators. 

Then they’ve also got to package your products. Because ziplocks are no good anymore, the state requires all that child safe stuff, and it’s gotta happen before it hits the store. So besides all of the cultivation costs, there’s another dollar or two tacked on in hard costs just to brand the goods and get them to you. That means if the cultivator WAS seeing $15/eighth, after hard costs they’re only seeing around $1-5 per eighth in profit. 

Hardly anything to write home about, and we haven’t even gotten into what it takes to get to this point!

Pre Production Costs

We all know that top shelf indoor doesn’t grow in a dump, right? There’s a LOT that goes into setting up a room, and while it’s hard to deduct these costs from an individual eighth, I feel it’s important to give you some context into just how expensive setting up one of these rooms is, and how much it takes to run it. 

Build outs cost between $300-500 PER SQUARE FOOT of facility you’re operating in. That means if you’re setting up a 1,000 sq ft facility you’re looking at $300-500k, or at 10,000 sq ft $3-5 million. 

Past that, those expenses I mentioned have monthly costs. Operating the facility can cost between $5-8 per sq foot per month. That can translate to $5-8k per month at a 1,000 sq ft facility, or $50-80k per month at the 10,000 size. As you can see, these numbers are adding up QUICK. 

And we haven’t even added in the costs to actually become a legal operator, and not just a traditional one. That probably takes another million or so as it’s such an annoying and complicated process that I’m not even going to get into it. 

So with hundreds of thousands in set up costs, tens of thousands in operational per month, and around $3 profit per eighth, remind me again about how greedy these guys are? The cultivators, not the state. Those guys are caking up.

Courtesy of High Times

The Man

The sad truth is the one who’s fucking us here isn’t the cultivator, it’s the government. Their crazy taxes and restrictions are the reason why most of this process is so expensive, and why hardly anyone is making a great check right now. To break them down quickly, and using Los Angeles as an example, 34.5% of whatever the final cost of your goods are went directly to the government in this county. That means over 1/3 of what you’re paying doesn’t feed or support any of the people actually involved in the making of your product – just the legislators making this process so difficult for them. 

That 34.5% breaks down as follows: 15% State Excise Tax, 10% City Tax, 9.25% County tax. All to the man for giving you the privilege to spend this much money on weed.

Even worse, U.S. Tax Code 280E says that everyone involved in the sale of federally illegal *drugs* are taxed at the highest rate possible, which means that 43-47% of anything those involved in the process makes goes right back to the feds. They are literally doing everything they can to make sure these guys DON’T make money.

I haven’t even gotten into the mechanics of retailers and distributors, who while I understand may also seem greedy off the rip because of their mark ups, are actually mostly barely surviving as well. It’s easy to forget how hard it is to run a business, to feed your staff, and pay all your bills – in any industry. But I assure you, the game is further rigged in cannabis – and that’s why everyone’s so excited to sell merch!

Support your people

When all’s said and done, I understand why consumers are pissed about prices. The state of the industry today sucks, truly. But it’s not the fault of those of us who are cultivating, it’s largely due to the states greed. While we all want a better tomorrow, let’s do our best to help those who ARE focused on providing us with the best products possible, and not just those with the money to race to scale to make MORE money off us. I understand that quantity looks appetizing, but trust me, quality will get you there way faster, every time.

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The Industry’s Identity Crisis: Our Escape Has Gone Corporate

Remember when weed was fun? We used to love it here. Now it sometimes feels like a chore. The fuck’s up with that? Well friends, here’s the sad truth: pot ain’t what it used to be, for a lot of reasons.

Before we get into the nitty gritty, let’s go over how many of us got here:

Cannabis has long been a vibrant subculture – or counterculture. A plant that seemingly brought people together, helped them forget their problems for a while, and gave many of us outsiders – or weirdos, if you will – a way to find our tribe, hooked us all – though maybe not in the traditional ‘addictive’ sense. From the love of the plant, a community grew. And while much of the world laughed at us, we championed each other, and as a result, we flourished.

But good times don’t last forever, and I’m sorry to say, our inside joke got out, and now everybody’s in on it.

Early Days

Keeping an eye on ‘who we were’ for a sec, and before we get into some harsh realities, it’s important to note just how attractive we actually are. Many, if not all, of the most fun people I know, came to me through the plant – long before I was some High Times guy that people wanted to talk to. There’s a cool factor that comes with doing your own thing, and our community exudes that in spades. Some call it not giving a fuck, but to me it’s that search for originality – the act of finding yourself – that’s largely provided to us by the plant. While people often say things like ‘weed makes people friendly’, I think the truth is it actually just makes you more comfortable with who you truly are – and that’s a beautiful gift.

One of the most common things I hear when interviewing those I consider real heads – from cultivators, to trappers, to lifers – is that they got into the industry to fund, or grow their habit. While maybe they were also attracted by what they believed to be ‘riches’ at the time, it was the ability to make their own way that sealed the deal. We all wanted to blaze our own trail, and invest in this thing we truly loved. Most of us knew nothing about taxes, or compliance. We were outlaws, rebels.

It’s hard to say it was always easy, and we had more than our fair share of casualties. From fighting the federal prohibition and avoiding jail time to ducking into alleys to light up, it hardened us, and we had earned our places in this growing economy.

Now flash forward a few years, a piecemeal legalization, an insane tax structure in pretty much every state, and a whole lot of new, clean faces – what the fuck happened?

Coming of Age

Say what you will about where shit’s gotten, it’s hard to deny that things have largely worked out for us so far. We’re not getting locked up as much. We can be more open about our passions. Cannabis brands are worth billions of dollars, and many of our icons have become kings; fans still mob Cheech and Chong meet & greets, the Dead’s still touring – and with one of the biggest mainstream pop stars of our time, no less. Now Netflix is making shows about us, FOX News is talking about edibles – and with that, friends, we’ve jumped the shark.

Flash forward to today and the THC rat race is killing us, and publicists have decided microdosing is the wave. No one’s making the money they’re used to, and I know how frustrating it is to see a slew of new products coming to market that seem designed for anyone but you.

One of the most common misconceptions about legalization is that it was going to create more space for us. I’m sorry to be the bearer of bad news, but what we were actually making room for was them. The outsiders. Those NOT in-the-know. Now while that may seem scary, it’s important to note that this is part of the process. Growing up is uncomfortable, but one of the first things you realize in your journey to maturity is that the world is a lot bigger than you. Creating space for something you love doesn’t mean you get to just clone yourself a dozen times to enjoy it 12x as much. It means you’re introducing your love to the world, and the world might not see her the same way you do. That’s a scary thing!

But recall, we were once on the outside too, and we did alright.

An even scarier thing perhaps is all the new players flooding the field. Not consumers, but VCs and executives from other ‘restrictive’ industries telling us how to sell our products. There’s no shortage of new money and new interest coming in to get a slice of the pie.

In order to get to the next level, we should acknowledge a basic truth: in almost all situations, people fear change. While that’s far more a mental hurdle than an actual object to jump over, things are changing in a BIG way right now. It’s natural to feel uneasy. Hold fast, and keep in mind that despite the turbulence, we’re moving in the right direction. We’ll have to learn some new tricks, and we’re not out of the fight, but pressure makes diamonds, and no one changes the world by staying comfortable. (Remember, we weren’t for a LONG time…) And don’t forget, we have home court advantage here.

All Grown Up

While I might’ve already turned most of you off by refusing to sugarcoat the reality we’re facing, the original intention of this piece was to offer some suggestions that may help with this changing landscape. I’m no scholar, and I’m not running your business, so take this as a guide more than commandments – I’m not Moses – but I’ve got a few ideas that I believe will help ensure you see the next level of this tower we’re building.

First, I know we all think ‘corporate’ is code for the Deathstar, but remember, if you do anything well for long enough, you eventually become the man. I know we all grew up saying damn that guy, but there are very real reasons why once your success reaches unmanageable heights, people hire a team. You’ve already done this, you’ve just got to take it to the next level now, and that’s what going corporate means. We’ve largely created the stigma we’re worried about. You probably don’t know the best tax loopholes, and compliance shortcuts – that’s why you hire an expert. A corporation, when built properly, is just a well-staffed group of experts with the support structures necessary to tackle bigger problems. A lot of cooks will enter the kitchen, and there will be many more conversations before taking action, but it kinda sounds like the dream not to have to worry about filing your own paperwork, no?

Next, and an example I make often, is that I’ve never had a problem taking money from rich kids. They usually don’t value it as much as you will, and they can afford to take more shots if they screw up so they’re not as worried about failure – utilize their blessings to get your goals accomplished, whatever that may be.

We will often need them to surpass the compliance hurdles legalization has placed on us. That said, be careful not to let the money dictate the conversation. You see, in MOST of these situations, the money is coming to you because you know what’s up. As long as you don’t let them forget that YOU are what they’re investing in, money’s helpful for a lot.

Another important thing to remember is that we’re in a race to the bottom right now. As all the new money tries to ‘achieve scale’ trying to make every step in the process as bottom-line effective as possible – which largely seems to mean in their minds ‘be so big we can tell the market what it wants’, they are losing hundreds of millions learning the market doesn’t want to buy boof, and values quality. As a real consumer, you know this. They largely don’t. That will change with time, and the only thing that will retain its value through this process, that they will eventually have to acknowledge and PAY FOR, is your experience. Your expertise. Now that may mean we’re in for a few rough years, no question. It might also mean some of you who have run your own businesses forever will go from owners to employees – that’s a hard pill to swallow.

The thing to keep in mind is, you can build a much bigger ship when you don’t do it alone, just focusing on your strengths. There’s an old adage ‘If you want to go fast, go alone. If you want to go far, build a team’, and that holds especially true here. It’s the corporate point again, right? Would you rather make $5 million by yourself, or collect 10% of $500 million? I’ve written a lot about the successes of players who have succeeded largely off of the strength of the network they’ve built. You don’t have to say you learned it from them, but please, take note. There’s an important lesson there. We’re not playing the same game anymore, and you’ve got to evolve to survive.


This last point may lose the rest of you, but try to stick with me, we’re almost there. Remember what I said earlier about that beautiful gift? Well the thing is, while showing us and helping us accept and appreciate who we are individually, it actually doesn’t always make us the most accepting of others who don’t fit a similar mold. Try not to take that as a slight, but as something to open your eyes to. It’s not an accusation, just something you should look for in your own actions, before you tear down the ideas of others. We don’t all have the same perspective – this is the root of why diversity is so important.

While I am absolutely not saying these new guys know what they’re doing, I am saying our overconfidence can sometimes be a turn off to outsiders who don’t get us yet, and that can hinder us more than benefit. Just think about how polarizing social media has gotten. We can’t even mention Sexism without a thousand individual and unaffected perspectives trying to tear down the basic notion based on their personal experiences. It gets visceral.

We need to remember to look outside ourselves, and when necessary, help them see your perspective from a place of understanding, not judgment. This is something I definitely need to work on myself, but I know will help many of you as well. Ego should be all of our biggest enemies.

If there’s one thing us lifers have in common, it’s that we’re here for the long haul. We’re not going anywhere – we couldn’t imagine being anywhere else. While most of these fair-weather fans will head for the new wave once the next billion dollar opportunity comes along (thanks Web3), we’ll still be here. But let’s not make the party we’re having unattractive to outsiders, because we’ll always need customers.

Finally, I often joke that most of the industry’s problems stem from the fact that not enough people involved in the supply chain are smoking. That’s especially true for all the new faces joining us to take advantage of the supposed ‘gold rush’. But a lot of the ones that are, also typically ain’t high enough (trust, I’m going to get to the withdrawal conversation at some point…) and we can all use each other’s understanding as we navigate through this trying time. I don’t know about you guys, but my love of weed is one of the only things in my life I’ve never had to fake, and we are finally in a time where we can celebrate that around the clock basically anywhere. Don’t forget how many people died, and went to jail, for this luxury (or basic human right, whatever). Things COULD be looking better than ever before, it’s just a matter of perspective. We’ll get there.

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Armored Car Company Sues California Sheriff and FBI for ‘Highway Robbery’ of Dispensary Cash

An armored vehicle company claims that officers from the San Bernardino County Sheriff’s Department and Federal Bureau of Investigation (FBI) stole legally obtained cash from drivers and clients.

Empyreal Logistics, a company that transports money for dispensaries and other companies, filed a civil suit in the United States District Court for the Central District of California, Eastern Division. Empyreal does not even transport cannabis itself—just large amounts of cash for cannabis-related companies. The company operates in multiple states.

Police and federal agents learned the trucks catered to cannabis businesses, so they picked off trucks of cash as though they were sitting ducks, even though the businesses are state-legal.

The legal team for Empyreal accuses the FBI and the San Bernardino County Sheriff’s Department of allegedly scheming to illegally pull over company vehicles and seize money from its clients.

The Institute for Justice reports that during five specific stops, no arrests or tickets were given—yet they led to forfeiture of all deposits in the trucks, anyways. Three particular stops alone amounted to over $1 million in cash.

“Specifically, Plaintiff Empyreal Logistics, a cash-in-transit company operating in 28 states, challenges the ongoing stops and searches of its vehicles, and the seizure of cash and other property lawfully transported therein,” the civil suit reads. 

It continues, “These unlawful and unconstitutional stops, searches, and seizures are orchestrated by the Department of Justice and its subordinate law-enforcement agencies, including the Federal Bureau of Investigation and the Drug Enforcement Administration, in conjunction with local law-enforcement officials, including the San Bernardino County Sheriff. Together, these law-enforcement agencies are targeting armored vehicles owned by Empyreal because those vehicles are transporting cash proceeds from state-legal medical and adult-use cannabis dispensaries to legitimate financial institutions such as banks and credit unions. Notably, Empyreal never transports any actual cannabis.”

What is especially alarming is the stops involving the San Bernardino Sheriff’s Department—where cannabis is legal.

The problem isn’t limited to California. Beginning in May 2021, Empyreal’s vehicles have been stopped and searched by sheriff’s deputies five times, with two incidents in Kansas and three more in San Bernardino County, California. The three San Bernardino incidents took place over the course of just eight weeks, including the most recent stop January 6. 

One incident involved an employee of Empyreal during a traffic stop on May 18 in Dickinson County, Kansas after being collected by the employee from medical cannabis dispensaries in Missouri. In that incident, Empyreal is seeking the return of $165,000 in cash.

Transporting large amounts of cash is due to the federal legal status of cannabis, which bars most cannabis companies from dealing with banks.

As it turns out, some legal experts pointed to a motive for the questionable seizures.

The Institute for Justice notes that each time officers seized money (legal proceeds), they turned it over to federal agencies to go through federal forfeiture protocols. If successfully forfeited, up to 80 percent of the money taken through the federal “equitable sharing” program would then return to local sheriffs to spend as they please.

Furthermore, companies such as Empyreal are considered essential, because moving the cash off of properties reduces the danger level for robberies.

While sheriffs may think they can use the federal equitable sharing program as a loophole around state law, the forfeitures are not allowed under federal law either.

JD Supra notes that despite a recent Supreme Court ruling under Timbs v. Indiana, “asset forfeiture laws still stand as uniquely effective enforcement tools that the county’s federal, state, and local law enforcement officials have at their disposal, posing a threat to the recreational cannabis market.”

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The Importance Of Taking A Tolerance Break For Your Health

Smoking weed is a great way to unwind and has many benefits, but most stoners underestimate the importance of taking a tolerance break for your health. If you’re unfamiliar with the term, a tolerance break is when you take a long break from consuming any cannabis products. The idea is that as a stoner you’ll […]

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Flashback Friday: The Greatest Scams In Modern History

From the July, 1979 edition of High Times comes Michael Chance’s fascinating story, “Scams: The Greatest Hustles, Cons and Rip-Offs of Modern History.”

The Western world loves nothing more than a great scam. Give them a simple thief and they will jail him for life. Give them a good con man and they will elevate him to the highest office, apotheosize him in the arts and literature, and throw fortunes at his feet. The victims of a scam may arouse our sympathy, but the perpetrators often elicit awe, envy and maybe a few books and a movie. Indeed, con artists, hucksters and magic beans have never had it so good.

The players and their marks are now so numerous that a language has followed in their wake. Such commonplace terms as rip-off, fix, and kickback were virtually unknown a generation ago. The word scam has only recently attained dictionary status and appears routinely in quotation marks in that most bottom line of language, the New York Times. Etymologists claim that this decade has been surprisingly barren in the generation of new words, but scam has arrived. It looks like it’s going to be even bigger than bustle. The scam is a way of life. A philosophy. Maybe even a political system.

The term rip-off derives from a popular scam of the mid ’60s. At that time kilos of Mexican marijuana were often sold in small, compressed “Texas bricks” that were each individually packaged in about two ounces of heavy wrapping paper. A rip-off dealer—and there were many, as this pot dominated the summer market for a good many years—would saw off a two-ounce corner of the brick, keeping the severed dope and bringing the total weight of the brick, including paper, to a kilo. You paid for two ounces of paper on each kilo. The exposed corner was there so you could examine the pot, supposedly. Some of these dealers today are successful commodities brokers.

Scam masters aren’t new to Western art and literature. Witness Mark Twain’s Duke and Dauphin from Huckleberry Finn, or Melville’s enigmatic The Confidence Man, acclaimed by many critics as having best captured the national consciousness long sought after as the elusive Great American Novel. Even more than Moby Dick. Edgar Allan Poe, always in need of some spare cash to fill his opium pipe, once wrote a fabricated account of traveling around the globe in a balloon. The story was an assignment from a New York newspaper that hoped to bolster its sagging circulation. The story, an eyepopper during the earth-bound period, worked. After Poe’s death the “hoax” was discovered.

Not quite in the same league, but close, was H.L. Mencken’s phony account of the history of the bathtub in the respected pages of the American Mercury. Mencken claimed that the bathtub was a relatively new innovation with its antecedent in the early Egyptian public baths. Complete with a brief bio of the European inventor of the bathtub, the stories generated a froth of academic studies. When months of research failed to substantiate Mencken’s claims, he said he was “flabbergasted” that anyone had believed the story in the first place. And of course there is Clifford Irving, whose phony biography of Howard Hughes earned him two years in the slammer.

A war-weary world roared with laughter when Hans Van Meegeren, arrested for allegedly selling a hot Vermeer to Hermann Goering, claimed in his defense that he had painted the picture himself. The skeptical art experts of the Nazi elite ordered him to paint another Vermeer as they watched, which he executed to perfection. He had, it turned out, produced a half-dozen Vermeers between 1939 and 1943 and sold them for more than $3 million. Twenty years later the great art institutes of Europe again suffered humiliation when the famed art forger Emil de Hory confessed all. De Hory, incidentally, is a close friend of Clifford Irving.

The world of academia has never paid much homage to scam masters, perhaps because they are too close to home. Often a philosopher’s stone turns out to be made of clay. Such was the case when the Piltdown Man, discovered by a road crew late in the 19th century and purported by many of the leading anthropologists to be the missing link, turned out in fact to have been a college prank.

Scams for the common man are perhaps as old as religion. Even before bingo, the numbers rackets and lotteries were taken from private hustlers and officially sanctioned as generators of state revenue. There was the carnival. Today the carnival is tightly regulated and relatively harmless, but from the Depression to the late ’50s it was considered a sort of Sodom and Gomorrah on wheels. Not to be confused with circuses that have wild animals and talented performers, the carnival is simply a motley rolling assortment of rides, games and sideshow freaks, probably a hybrid between vagabond theater groups and gypsy caravans that got it together on the road.

The carnivals played small towns in the South and Midwest, paying stiff nuts to the local officials and making it up through an assortment of crooked games. Like policemen’s balls, carnivals were allowed to operate gambling games in otherwise verboten areas, with presumably half the take going to the group or organization that sponsored them. After setting up revival-meeting-sized tents, some filled with new cars, tractors, radios, guns and other prizes, the carnies would throw open their games of skill and chance to all comers.

More than one carnival was burned to the ground by storms of angry townspeople after a local had lost the family farm trying to win a Kewpie doll at the six-cat tent. Competition for the backwater dollar was tough, what with riverboat gamblers and snake-oil hucksters on the loose everywhere, so the resourceful carnies developed a catalog of gimmickry that soon brought the scam dollar to their corner: basket-toss games with hidden assistants who, by pulling wires, could cause the ball to bounce out; lead-lined milk bottles for the one-ball pitch; hidden magnets and metal slugs in the pool games; loaded dice; stacked decks; they didn’t miss a trick. The carnival was also a haven for pickpockets, ex-cons and misfits who exchanged notes on their various talents. Several states outlawed carnival games altogether, and the others were soon eclipsed by Las Vegas, Atlantic City and a host of laws.

A little higher rank on the scam scale is accorded to the originators of chain letters. The chain letter is the most primal version of the pyramid scheme, the most ancient and peculiarly American of the pie-in-the-sky come-ons. An advanced construct, the Ponzi scheme, or “pyramiding,” flourished earlier in the century, and today its most sophisticated form, deficit-financed capitalism, has been adopted as the national-economy model for the West. All of these scams have as their common thread the device of forwarding money to the designers and perpetrators from those below on the premise that equity will eventually be forthcoming from those below them, or in the case of the economy, future generations. There are, of course, finite limitations on this geometric progression. This is what Harry Truman meant when he said, “The buck stops here.”

The most recent chain letter to make its inventors a fortune was the “chain of gold” letter that originated in San Francisco, a city that for some reason has always ranked high on the con artist’s itinerary. The letters are sold to each mark for $100. Fifty dollars goes to the seller of the letter, and $50 goes to the top name on a list of 12. Each time someone else buys the letter, the purchaser’s name moves one notch up the list. If the chain is unbroken, the buyer purportedly collects more than $100,000. The catch is that the first half-dozen names on such lists ordinarily belong to the same person or group who hatched the scheme in the first place. The sixfold logarithm eventually nets them money if they can find a few suckers to invest early, with the guarantee that those people will beat the bushes for new investors in hopes of getting back their original investment and maybe something extra. Of course, they seldom do. After plucking scores of gullible San Franciscans the letter leaped to the New York theater scene, another popular breeder culture for get-rich-quick gimmickry, where it reportedly netted a number of big-name Broadway fish. Theater people, like San Franciscans, little old ladies and students, seem to be a favorite target of scams.

The classic pigeon-drop has always been a favorite in certain areas—particularly San Francisco, Boston and Madison, Wisconsin, owing partly to the large numbers of students, artists and geriatrics in these towns. Its victims are almost always sweet, elderly grandmothers trying to make a fast buck. It works like this:

A young, well-dressed woman suddenly pops up in front of the elderly mark waving an envelope and yelling, “Look what I found!” The envelope is apparently stuffed with money, and she shows it to the mark, wondering what she should do. The older woman usually suggests they call the authorities. So they call the younger woman’s lawyer, who tells them to come right over. He tells them, after checking with banks and the police, that no one has claimed the money and they may be the lucky owners. There’s only one catch: the two must provide matching funds to prove “good faith.” Both $20,000 sums will be kept by the police, or a bank, for a while, then if no one claims the money it is theirs.

Of course the younger woman has no such stake and, in spite of the preposterous story about “good faith” funds, the presence of the “lawyer” more often than not overrides the mark’s suspicions, so she coughs up the $20,000. The cons seldom set up a pigeon who doesn’t have the money. Once the funds are withdrawn and delivered to the lawyer, the three set out for the bank or wherever, and at one point the lawyer leaves the room on some pretense, the younger woman soon excuses herself to go to the bathroom, and both vanish. In Madison, Wisconsin, this ploy was executed by Chicago-based con artists so frequently that there are now semiannual warnings against it in the newspapers.

A lot of scam artists these days scorn U.S. currency in favor of precious metals and jewels. Phony gems, gold fever and international contrabandistas are the stuff these intrigues are made of, too numerous to mention but one: A well-heeled Texan, introducing himself as an oil tycoon, strode into one of Houston’s high-roller jewelry stores and picked out a rare black pearl that sported a six-figure price tag. A few days later he was back, saying that his girl friend was so enthralled with the bauble that she just had to have another to make a pair of earrings. He would pay any price for an identical pearl.

The store scoured the world’s jewelry exchanges at the daily insistence of the Texan and at last found a European buyer claiming to have a line on just such a pearl. It cost, however, twice what the original did, hard cash. A buyer was dispatched to examine the pearl that, he assured the home office, was the mirror inage of the original. After a final confirmation with the overjoyed Texan the pearl was purchased and the buyer winged it back to Houston. The store called the Texan—he wasn’t in. He was never seen again, and the pearl turned out to be the same one they’d sold him.

Also worthy of note in this league is Stanley Rifkin, the Los Angeles bank accountant who through the miracle of electronics recently managed to buy $12 million worth of diamonds from the Russians with money that only existed on computer tapes. Rifkin, a computer analyst who had already ripped off the Security Pacific Bank for $10.2 million, contrived to reroute some of the bank’s computer funds to Switzerland, where he scored the diamonds. It was a week before anyone noticed.

Banking and law officials are particularly reticent about Rifkin’s case because it spotlights the simplicity of computer crime. Bunco squads have warned for 20 years that computer crime would be the wave of the future, and they were right. Not only have the biggest contemporary frauds and swindles involved computers at some strategic point, but the rising popularity of home computers no doubt augurs further enlightenment to techno-outlaws and headaches for those concerns that stash their money in electronics.

A Long Island, New York, man made a bundle with his home computer by programming it with every municipality, church and school district in the nation, then billing them for items they did not receive. Using letterheads of two bogus companies, the man sent invoices seldom exceeding $400 for items such as snow pellets and insecticides to thousands of cities in all 50 states. Few questioned such petty expenditures, and those who did assumed it was a mistake. The scam netted its mentor over $1 million a year until tripped up when a city attorney in Richland Hills, Texas, demanded repayment of two $245 checks the city had paid for nonexistent items. They received the checks back, but they bounced and the city attorney launched an investigation that turned up the operation. Had the checks been good the man might still be in business.

A more minor-league computer scam was scored by two business-machine salesmen in New York who were falsifying grades at the Queens College data-processing center. For the right price, dumb students and even nonstudents could make Phi Beta Kappa, and scores of them paid it. The electronic wizards were nailed when a physics instructor noticed the discrepancy between his handwritten grades and the computer printout.

But these scams for the most part are small potatoes. When hustlers sit around in the cell-block or in the Plaza Hotel, they talk about the legendary scam artists, confidence players who have sold national monuments and caused entire banks to collapse and entire economies to teeter on the brink of destruction. And to be a great scam it not only has to be questionably legal and financially successful, it must show up the victims to be the greedy fools that they are. Herewith, the ten greatest scams of all time.

Top 10 Scams

The Man Who Sold the Eiffel Tower

Though no one has ever bought the Brooklyn Bridge, there have been buyers for other landmarks—such as the Eiffel Tower. In 1925 an important French bureaucrat, Monsieur Dante, held a highly secretive meeting of scrap-iron dealers in a swank Paris hotel. Monsieur Dante told those assembled that the French government was taking bids on the demolition of the Eiffel Tower. The government could no longer afford to maintain the structure and could use the more than 7,000 tons of steel involved. This was all top secret.

Andre Poisson, a socially ambitious scrap-metals dealer, was determined to get the job. After making himself conspicuous with a series of ever more attractive bids, Poisson was finally summoned aside by Monsieur Dante. In situations like this, Dante explained, it was customary for an additional sum to expedite bureaucratic procedures: in other words, a bribe. Poisson paid for the Eiffel Tower and didn’t find out until Monsieur Dante was in Vienna that the government bureaucrat he had been dealing with was in reality Count Victor Lustig, one of the cleverest con men of all times.

Fortunes came and went through Lustig’s hands, always acquired through his assumed title, elegant clothes, high manners and the lordly society he frequented. Born in Czechoslovakia, Lustig was a bright scholar who spoke six languages. His quarry was mainly the European and American ocean-liner set. He worked closely with the legendary Nicky Arnstein, king of the ocean-liner, gamblers, who taught him how to pick out the nouveau riches and the gullible old rich. Time and again Lustig conned well-heeled travelers out of thousands of dollars in investment deals. Often, he would talk a partner into accepting a deal. Both would put up their money, Lustig would hold it and disappear at the next port of call.

The Rumanian Box Hoax

The other scam that Lustig perfected involved a prop called the Rumanian Box. A glossy mahogany affair replete with brass knobs, dials and gears, the box was crafted to Lustig’s specifications by a famed New York cabinetmaker and toted by Lustig to the playgrounds of the idle rich.

At a Palm Springs hotel he once spent a week and thousands of dollars winning the confidence of Herman Loller, a former auto mechanic turned tycoon through his parts-supply business, which was currently threatened by the larger auto manufacturers, who were making their own parts. After a brief acquaintance and much urging, Count Lustig finally agreed to show Loller how he made his living. After closing the curtains in his room Lustig exhibited the impressive box to his awed friend. There were two slots, each the size of a dollar bill, into which Lustig put a thousand-dollar bill. Six hours later, he explained, there would be two of the bills. The pair went to Loller’s yacht to wait. When they returned again Lustig fiddled with the controls and out came two thousand-dollar bills from the box. He told Loller he could cash them at any bank, but not the same bank, since they had the same serial number.

Loller paid $25,000 for the box but was never able to make it work. For six months he refused to believe he had been ripped off, blaming instead his own ineptitude with the controls for the box’s failure to manufacture money. Finally his enraged wife smashed the box with a hammer and destroyed it.

Lustig avoided imprisonment for 30 years and talked his way out of over 40 arrests. He once talked a vengeful sheriff, who had paid $10,000 for the box, out of shooting him by repaying his money. The sheriff was soon arrested for passing counterfeit bills. Lustig finally got nailed on a counterfeiting scheme.

The Great Ponzi Scheme

No one, excepting banks, insurance companies and the U.S. government, has ever pulled off quite such a masterful scam as Charles Ponzi. Boston residents went wild when Ponzi promised people that he would return their original investment plus 50-percent interest in 90 days. People were skeptical at first, but after he had maintained the operation without default for four months they began investing in droves.

Ponzi explained that he made money from investments in international postal-reply coupons. It was a vague story involving fluctuating rates of interests, inflation and rediscounting, with agents buying and mailing all over Europe. But Ponzi would say that he, like Rockefeller, had a right to some amount of secrecy.

After four months working Boston’s blue-collar North End, Ponzi was so successful he moved his Foreign Exchange Company, as it was now called, to classier digs. He also offered a deal where anyone who could get someone else to invest would be given ten cents on each dollar invested. Great lines of people appeared, paying their cash and receiving a slip of paper with the maturity date in return. Within six months his operation was forced to move to bigger quarters yet.

Ponzi, a poor Italian whose last job before starting his investment company was that of a $16-a-week stock clerk, from which he was fired, was now the toast of Boston upper-crust society. He and his wife moved to a mansion in suburban Lexington. They drove in a chauffeured limousine. He purchased controlling interest in the Hanover Trust Company and was soon recommended and installed as president. He bought the company that had employed him as a stock clerk barely a year after he had been fired, and he fired the man who fired him.

Ponzi was undone when the city editor of the Boston Post did some checking and found that all the postal coupons sold in the world the year before added up to only a fraction of Ponzi’s inventory. At first the expose only brought Ponzi more business; the day after the article appeared the line to Ponzi’s door was four blocks long and over $1 million was taken in. The newsman had to fight his way through the crowds to reach his office next door to Ponzi’s. But when Boston banks, which were seriously threatened, joined in the investigation, Ponzi’s secret was soon discovered: he had simply been robbing Peter to pay Paul. He would pay off the first debt with the second investment and so on. In all $15 million was involved, of which about $5 million was never recovered.

The Man Who Stole Portugal

Alvaes Reis, “the man who stole Portugal,” perpetrated perhaps the cleverest scam of all time. He managed to convince the firm of Waterlow and Sons of London, the company that printed money for the Bank of Portugal, to print money for him, using the real paper and the real plates. Reis convinced Sir William Waterlow, with the aid of forged documents and pure inspiration, that the government of Portugal wanted to issue three million pounds for circulation in their African colony of Angola. The notes would not need new serial numbers, for the government would stamp the word “Angola” on each note. The project was, naturally, top secret.

Reis and his partners (he had three) got the money, took it to Angola by suitcase, and, in order to facilitate distribution of the bills, opened a bank. They were a huge success and next tried to buy controlling interest in the Bank of Portugal. Reis’s theory was that at some point the bank would discover his fraud, and he could prevent investigation by running the bank. Behind all this was Reis’s real dream—to follow in the footsteps of his childhood hero Cecil Rhodes and create a Portuguese-African empire with himself as its leader.

As a youth, Reis studied engineering but was rejected by the government for a post in the colonial bureaucracy. He overcame that by forging a diploma from the University of London and had no trouble getting hired as a railway inspector in Angola. By the time he was 25, Reis had become inspector of public works for the colony, but this was not what Reis had in mind. He started his own company for the exploitation of Angola’s rich mineral deposits, especially gold and diamonds. Reis went looking for money in England and Holland to finance his company’s projects. He failed totally and had to go back to working for the Angolan railroad. Confident that he could pay the money back with ease after his company’s future discovery of diamond mines, Reis transferred $200,000 of the railroad’s money to the firm of Alvaes Reis. He was arrested for embezzlement, found guilty, served three months in jail during which he thought up and set up the bank-note scheme, was retried and acquitted.

Immediately on being freed he set the plan into action, with his key confederate appearing before Sir William Waterlow with forged credentials from the Portuguese government. It was the Bank of Portugal that eventually uncovered Reis’s monumental swindle. Suspicious of massive purchases of their stock, the bank’s directors grew very curious about Alvaes Reis. Police raided his Angolan bank and found great bundles of brand-new money. They should have been forgeries but were genuine in all detail. Finally, someone checked the serial numbers. It was the worst financial disaster in Portugal’s history, helped usher in the Salazar dictatorship and ruined one of the world’s greatest printing firms.

The South Sea Bubble Explosion

Another famous swindle with great political reverberations goes by the lovely name of the South Sea Bubble. The scene shifts from Portugal in the 1920s to London in 1711. There were a lot of rich people in London as in all of England at the beginning of the 18th century. Fortunes were being made in shipping, in banking, in trade and in investments. The economy was solid and it was growing and speculation was in the air. Through a treaty that terminated the war of the Spanish succession, Britain was awarded the right to trade with the Spanish colonies. The average Londoner knew nothing about the Spanish colonies (or, for that matter, about South America or anywhere else in the world except England and Europe) but that they were reported to be a source of endless riches—gold lying on the ground waiting to be picked up, etc. The South Sea Company sold this fantasy to the people of England, and they showed their faith in their (and the company’s) dream with a response so strong it has been described as mass hysteria.

The South Sea Company sold the people of England the chance to get in on the exploitation of the South Seas. Everyone invested, from the uneducated to the newly rich businessmen to the great nobles of England. In 1745 the Prince of Wales was named a governor of the company. He was soon replaced in that position by his father, King George I, who invested 60,000 pounds of his own—an enormous amount of money in those days.

In 1719, the South Sea Company took over the national debt of England. Everyone who had any power was deeply involved in the company’s fortunes. Naturally, such success did not go unimitated, and soon half of Europe was investing in the fantasy of untold riches, the promise of enough for all. People invested in companies that sprang up all around, companies that promised to fish for treasure in the sea, to extract silver from lead, to import jackasses from Spain.

The South Sea Company, believing its hold on the credulity of half a continent to be threatened by these imitators, tried to stop them by law. In revealing the fraudulent nature of these other companies, the South Sea Company burst its own bubble. People started to sell their stock, and the value of that stock dropped from 1,000 pounds a share to 180 pounds in less than two months.

Thousands of people went bankrupt. England’s economy was in serious trouble. Paper money was almost worthless. Unemployment rose and there were food riots. The crash echoed through Europe, followed by a smallpox epidemic — thought by some to be God’s punishment for fools. In the resulting arrests and trials, many of England’s leading citizens were found guilty. The South Sea Bubble was a disaster both for the company and the greedy, speculating public.

The Grand Central Station Swindle

Though it was Lustig’s style, he was not the man who peddled part of Grand Central Station. That happened in 1929. The impressive-looking stranger who approached Tony and Nick Fortunato in their Manhattan fruit store told them they had fortunately been among other successful fruit stands being considered to lease the information booth in the middle of Grand Central Station. Too many dumb questions were being asked at the booth, questions that could be handled at less cost by the ticket clerks. The agent, whose card read “T. Remington Grenfell, Vice-President, Grand Central Holding Corporation,” pulled out detailed blueprints showing plans for the conversion of the booth and specifications for a fruit stand.

The Fortunato brothers hesitated at the $100,000 advance lease, but the idea of doing business in the midst of the world’s busiest railway station convinced them to follow Grenfell to his offices for more details. A waiting chauffeur-driven limo drove them to a building next to Grand Central Station, where they entered through an office door labeled “Wilson A. Blodgett, President, Grand Central Holding Company.” As they entered, the Fortunatos overheard Blodgett finishing a phone conversation with their competitors. “Have your certified check in my hands by noon tomorrow and the booth is yours,” he told them. Horrified, Grenfell explained that the Fortunatos had just come to close the deal. Blodgett, after some consideration, decided the only fair thing to do would be to let “the first one here with the check have the lease to the booth.”

The next morning the brothers were at the bank when it opened and from there went immediately to Blodgett’s office with the money. The lease was signed and congratulations offered.

The lease called for the brothers to take over the booth on April Fool’s Day. They arrived to find business as usual in the information booth. Telling the information attendants that since it was after nine o’clock, “you and the others are supposed to be out of here,” they then had workmen begin stacking lumber and building materials next to the booth, obstructing traffic. A cop checked the lease and the blueprints and rousted a vice president of Grand Central Station who told the brothers that there was no such animal as the Grand Central Holding Company. Blodgett’s office was empty, their check had been cashed. After a year’s investigation the culprits were never found. Tony and Nick remained convinced the Grand Central Railroad itself was behind the swindle and for years would go to the information booth at the station and shake their fists and shout at the men in the booth.

64,000 Ghosts

But the biggest example of a swindle featuring a company’s financial success based on imaginary assets is both very recent and very close at hand. It is the case of the Equity Funding Corporation of Beverly Hills, a scandal that broke in 1973 and involved a record-breaking $2 billion worth of phony insurance policies.

Equity Funding Corporation of America went into business in 1960 with $10,000. Its growth in 13 years to assets of $1 billion set a new growth record. But that growth was based on sheer fantasy.

What started Equity Funding on the road to corporate fame and fortune was something called “leverage.” A salesman would tell a client, “You’re prepared to spend $300 on insurance. Instead of spending $300, spend $100—and put $200 into mutual funds.” The idea was to borrow against the mutual-fund investment to pay the premium on the insurance. The expectation was that earnings plus growth would be greater than the interest cost of the loan. Leverage meant using the same money twice. Of course, the customer had to pay two commissions, and there was no guarantee as to the financial health of the mutual fund. It was merely a debt that had to be repaid.

Insurance salesmen loved it. The public loved it. And most of all, Wall Street loved it. Equity Funding, with its unique concept and dazzling growth, became a “glamour stock.” By 1968, reported assets approached $200 million. The company moved to new quarters, the top floor of 1900 Avenue of the Stars, and its president, Stanley Goldblum, occupied the largest office in Century City. At this point, the worst crime that had been committed could be generously called creative bookkeeping.

In 1970, the stock market went through one of its periodic erosions, and Equity’s stock dropped from $80 to a low of $14 a share. It was then that Stanley Goldblum and his chief financial officers decided in favor of massive and outright fraud.They simply created imaginary people all over the United States and sold them life-insurance policies. More than 64,000 phony policies in all, totaling over a billion dollars. Using the principle of leverage, these policies were then resold, for cash, to other insurance companies. And, of course, Equity’s assets appeared to be growing tremendously, driving back up the price of the stock, making Equity Funding an attractive investment opportunity again.

These fictitious policies created a very big headache for the officers of Equity Funding, since the insurance business is tightly regulated by the government. Every detail had to ring true, and the fraud had to be kept hidden from most of the firm’s employees. Files had to be established for each “policy holder”; computers were specifically programmed, making them accomplices to the swindle; death certificates had to be forged. It all worked until Goldblum fired one of Equity’s vice-presidents as an economy measure. His name was Ronald Secrist, and he blew the whistle, ending the amazing story of Equity Funding. But, as of this writing, none of the Equity officers are in jail. Stanley Goldblum was, however, indicted in Los Angeles for mail fraud, bank fraud, securities fraud, the filing of false documents with the Securities and Exchange Commission and 41 other counts.

Don’t Ever Trust No Skirt

You would think that for a female to become a swindler she would have to be good-looking, or at least charming. Cassie Chadwick was neither of these, but she was certainly convincing. She began her career in Canada by going on a shopping spree financed solely by some business cards she had had printed with her name and the legend “Heiress to $15,000.” One of Cassie’s earliest discoveries is that people like to lend money to people who already have a lot of money.

Cassie’s shopping spree ended when she was arrested, but the intensity of her personality was such that the judge at her trial, instead of jailing her as a criminal, acquitted her on grounds of insanity. Cassie created a reality to suit herself, changing her name and history at will. In various incarnations she was the young Canadian heiress Elizabeth Bigley, who mortgaged her sister’s furniture while she was away on a trip; the wealthy Toledo clairvoyant Madame de Vere, who was sent to the Ohio penitentiary for nine years for forgery; and finally Mrs. Leroy S. Chadwick, the wife of a doctor and a prominent figure in Cleveland society.

But most of all Cassie Chadwick owed her good fortune to being the illegitimate daughter of Andrew Carnegie. At least that’s what she said. She once appeared to a carriage full of waiting lawyers (this was in New York in 1902), leaving Andrew Carnegie’s house with nearly $1 million worth of notes, just signed by Carnegie himself. The notes were later found to be forgeries. While inside the house, Cassie’s interview was with Carnegie’s housekeeper, its subject a maid’s references. The notes had been signed by Cassie at Mr. Carnegie’s kitchen table.

Cassie Chadwick lived a life of fabulous wealth in Cleveland. Once, to surprise her husband, she had the house redecorated while they ate dinner out in a downtown restaurant. She bought everything, and in great quantities, too—jewelry, paintings, furniture, the only seal dress ever made in Canada. Once she bought eight grand pianos as gifts for friends. So when Harry Rickey, an editor of the Cleveland Press, discovered Mrs. Chadwick was being sued for failure to pay a debt of $190,000, he got curious. After a lot of detective work by Mr. Rickey, his newspaper printed Cassie’s whole story, starting when she was heiress to a mere $15,000, straight through to the millions coming her way from the sometimes paternal Andrew Carnegie. She was arrested, and her “credit” was found to have come close to $2 million.

Cassie, backed up by her claim to the Carnegie fortune, seemed to cast a spell on bank presidents. Charles T. Beckwith, president of the Citizen’s National Bank of Oberlin, Ohio, had loaned Mrs. Chadwick $240,000, four times the total capitalization of his bank. Cassie died in prison but had a good run first, made possible by her wits and the greed of rich men who loaned her money at enormous rates of interest.

They Sold Plenty of Nothing

Two modern examples of empires built on a combination of assets both real and imagined were those headed by Billie Sol Estes in Texas and by Tino DeAngelis in New Jersey, both during the ’60s. The Billie Sol Estes scandal had severe repercussions for the administration of John F. Kennedy. The “salad-oil swindle’’ ruined one major brokerage and financially threatened scores of banks, trading companies and businesses.

Billie Sol Estes, a classic con man, started out with no money, just a small farm in west Texas. By the time he was 28, he was so successful he was named as one of the ten outstanding young men of 1953 by the U.S. Junior Chamber of Commerce. Through the Jaycees, Estes made many valuable contacts, and through one of them he obtained $100,000 in mortgage money. With this capital, Estes branched out into many businesses, including fertilizer and grains.

He had some unusual ideas about how to do business. “If you get into anyone far enough,” he’d say, “you’ve got yourself a partner.” In just that way, Estes joined up with a New York chemical manufacturer, an association that gave Estes some amount of financial credibility. To gain control of the anhydrous ammonia market, he lost millions of dollars undercutting other manufacturer’s prices, driving them out of business. He also took advantage of every price-support allowance offered by the U.S. government. He has been called “a welfare-state Ponzi”—he had an amazing ability to make money with the help of the Department of Agriculture.

Everything was set up to make millions of dollars. The only problem was, Estes’s setup had been so expensive to develop that he needed to raise more capital to start the money rolling in. He decided he would raise the money on nonexistent anhydrous-ammonia storage tanks. He collected more than $30 million in mortgages on imaginary tanks. He would rent an imaginary tank from a farmer and pay each farmer rent equal to the amount of the mortgage the farmer paid him. He made no money on the mortgages themselves but used their paper value as collateral for $22 million in loans.

Called “the biggest wheeler-dealer in all of west Texas,” Billie Sol Estes was not well liked. He ran for a seat on the local school board and lost to a write-in candidate. Blaming his defeat on the local newspaper, he set up a rival paper. The local paper then did a thorough investigation of Estes and printed the first story of his mortgage fraud. He served six years in jail and lost every cent he had.

Anthony DeAngelis started his remarkable career as a butcher, a field for which he showed great aptitude. He revolutionized the hog-dressing industry and made a fortune in meat during World War II, probably through the black market. When he was 35, DeAngelis bought stock control of a large meat-packing firm that sold its stock to the public and was listed on the American Stock Exchange. Five years later, the firm went bankrupt. Luckily, DeAngelis had diversified his capital before the bankruptcy and, with the help of the U.S. government, went into the salad-oil business.

The “Food for Peace” program brought surplus oil to sell to needy countries. To broaden his market, DeAngelis traveled through the world lining up orders. He was the first to take salad oil to the foreign marketplace. He took care of domestic competition for this market by buying the oil in the Midwest and selling it overseas, at a markup to the export companies. It was these companies that jumped at the chance to back him to put the scheme into operation. But no one could figure out how DeAngelis made any money. He paid the highest prices for domestic oil, paid transportation costs and finally sold the oil to export companies so cheaply there was no competition. Since everyone was making money, no one asked questions.

By the late 1950s, the business had grown to over $100 million a year, 75 percent of all the oil shipped overseas. But the real money, as usual, was coming in in the form of loans from bankers, brokers and businessmen in the United States and Europe. DeAngelis swindled hundreds of millions of dollars from these financial experts, his real victims. They would loan him money to buy more oil, but he was buying phantom oil. When DeAngelis was finally investigated (brought about by the failure of a Russian wheat deal), his miles of storage tanks were empty, and the money was gone. Many people thought DeAngelis did not work alone, and there are rumors he was backed by the Mafia. None of the money (over $100 million) was ever found. Anthony DeAngelis served seven years of his 20-year sentence and was paroled in 1972.

Uncle Sam’s Scam

Last, but far from least, there’s contemporary capitalism, which often differs from Charles Ponzi’s scam in only one respect: inflation. By devaluing tomorrow the money that is paid or owed today, the banks, insurance companies, the federal government and others who take money on the premise that they will return it in goods or services have only to pay back a portion of the money they received in the first place. Not only that, but it has been cleverly contrived so that people are forced to turn their money over to these institutions to earn piddling interest or they will lose even that.

Consider: a man has $1,000 he is saving for a Jacuzzi bathtub. If he hides it in his stereo, a year from today its buying power will have been reduced by the roughly 10-percent inflation to a real value of only $900. But if he puts it in a bank and earns 6-percent interest, the real value will have shrunk to only $954, and he will have avoided being ripped off for $54. This mark’s money is then taken by the scam masters who loan it out at even higher rates—up to 20 percent—or make long-term pledges such as social security and life insurance. Since it isn’t their money, they can’t lose. And since inflation will always go up higher than the rate at which they collect interest, these scam masters will always be rich. If it were not for inflation, this scam would, like the chain letters and Ponzi schemes everywhere, reach its finite limitations and collapse. Accordingly, price increments are subtly but inexorably advanced 10 percent each year, on transportation, food, clothing, shelter and virtually all the necessities of life that are currently subject to the scam master’s control. It is a condition of business, and any manufacturer or worker who fails to inflate by this rate will lose his or her line of credit and become an “enemy of the state.”

Again, like chain letters and Ponzi swindles, capitalist schemes are occasionally challenged. But always at a safely detached distance. For instance, when Nelson Rockefeller died, the New York Daily News, among others, characterized his father John D., the grand old man of the clan, whose business card read ‘‘John D. Rockefeller, Capitalist,” as a crook whose ‘‘special interest rate with the railroad” and “ruthless methods” made a billion dollars at a time when most people existed on the bare necessities of life, or less. Yet it is unthinkable that any newspaper in America would say the same sort of thing about the very much alive and kicking David Rockefeller, the most potent of the Rockefeller descendants, who in his capacity as head of the world’s largest capitalist monetary nerve center, Chase Manhattan Bank, is undisputed scam champion of the world.

It may seem odd to think that a whole culture embraces this scam, unprotesting, but it is hardly singular. The South Sea Bubble and the Great Depression were both similar monumental scams and little more. People like the fairy-tale finish that a scam culture promises, the lottery winner and the pot of gold under the pea. Many people in the Western world would rather live with poverty and gambler’s hope than with modest security and the certainty that nothing will change overnight. Capitalism may be a scam, but almost everybody loves a scam.

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Missouri Wants To Ban Medical Marijuana Businesses From Paying Taxes With Cash

COLUMBIA, Mo. (AP) — Missouri’s health department wants to ban medical marijuana businesses from paying taxes in cash, a move that industry advocates say could shut out small businesses from the field.

Missouri voters in 2018 made medical marijuana legal but sales are still prohibited under federal law.

institutions, particularly national banks, shy away from working with
the cannabis industry because of the federal ban, BeLeaf CEO Mitch
Meyers said. That forces some marijuana businesses to pay bills and
salaries in cash.

Meyers said Missouri’s proposed cash-only policy
will also make it difficult or impossible for some businesses to pay
state taxes.

“I don’t know how you can tell people to abide by the law, but then say cash is no good,” Meyers said.

The Department of Health and Senior Services did not immediately respond to a Friday Associated Press request for comment on the proposed policy, which also bans cash payments for fines and fees.

are Missouri banks that will work with cannabis businesses, Missouri
Medical Cannabis Trade Association spokesman Jack Cardetti said.

“But those options are not plentiful,” he said.

Cardetti said the same issues with reluctant banks apply to getting cashier’s checks.

The U.S. House of Representatives in September passed a bill that would grant legal marijuana businesses access to banking, but the measure still is pending in the Senate.

who applied for state licenses to grow and sell medical cannabis, said
it took years for her company to open an account with a state bank. She
said state banks tend to take on only a few marijuana-industry clients,
especially those with which they already have established business

Small, rural businesses and new business owners might have less luck opening accounts, she said.

businesses in other states with legal recreational or medical cannabis
use have faced similar issues, putting pressure on federal lawmakers to

Cardetti said the Missouri trade association wants the state
health department to make exceptions to the ban on cash for businesses
without bank accounts until banking becomes more widely accessible.

The health department is accepting public feedback on the proposal through Tuesday.

By Summer Ballentine

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Portland City Council Approves Over $630k In Cannabis Equity Grants

Portland, Oregon took a big step towards properly funding its social equity in cannabis program on Wednesday. Its city council earmarked $631,000 in grants to go to the grant program that has been established to ensure that people who have been negatively impacted by the war on drugs have a place in the marijuana industry.

The decision comes in the midst of a growing cannabis tax revenue windfall for Oregon. During the 2019 fiscal year, the state’s Department of Revenue took in over $102 million. That money comes from a 17 percent tax on marijuana sales, with cities and counties permitted to add an extra three percent should they see fit. It’s expected to amount to $284.2 million during 2021-2023.

Typically, 40 percent of that money goes to schools, 25 percent to various mental health and addiction services, and 35 percent to different law enforcement agencies. But a report by the Portland city auditor found that in the state’s largest city, 79 percent of cannabis tax revenue was being channeled into transportation and law enforcement.

The People’s Voice Has Been Heard

The city council members’ vote on Wednesday was an attempt to redistribute funds according to Oregon voters’ wishes. In 2016, cannabis tax measure 26-180 was passed, declaring that a three percent tax on cannabis sales could go to supporting social equity measures within the marijuana industry. Voters approved the measure, which included support for women and persons of color-owned businesses, safety measures against unsafe drivers, and addiction services.

One of the qualifying factors for the entry of small businesses into the program is that people with a prior cannabis conviction comprise either at least 25 percent of ownership or 20 percent of staff hours.

The recently approved $631,000 will go to support retroactive justice for the negative effects of cannabis prohibition. Similar funding has been used to help level the cannabis industry playing field in a variety of ways.

“You already have hundreds of Portlanders who have been directly benefiting from this tax funding,” said Brandon Goldner, who is a supervisor of the city’s Cannabis Program. “Whether it’s people getting workforce development, help getting education in the construction field, or whether it’s people who are helping – getting help clearing their records and expunging their records.”

Given Portland’s history of racially biased cannabis-related policing, the programs seem particularly crucial.

“Many studies have shown that adults across races use cannabis at similar rates,” POC cannabis advocate Jeanette Ward Horton shared with the attendees of the council meeting on Wednesday. “However, we can see […] the disproportionate targeting first of African American communities. Second, native American communities.”

Horton’s organization the NuLeaf Project was established to support cannabis business owners of color, and runs a mentoring program, gives out grants, and runs a business accelerator program that aims to build technical skills in future entrepreneurs.

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Cannabis Merchants Find Cash Workarounds, but Take Chances with the Law

It’s a rare problem with no easy solution: U.S. cannabis businesses are forced to operate in cash, but they can’t access banking services and, often, neither can their customers. 

Because the federal government still considers marijuana a controlled substance, banks back off from accepting deposits or other services, fearing they’ll run afoul of federal banking regulations.   

In some states, even hemp growers and cannabidiol (CBD) manufacturers are being dropped by banks and credit card companies for their unresolved legal status. Payment workarounds and cash-based operations are the only options for some small companies. 

As a result, some cannabis companies have resorted to questionable and illegal ways of dealing with this thorny issue. They may use offshore processing companies and hire  sales groups to represent those companies. Some use debit card processing and cashless ATM vouchers in which the money is transferred electronically and a receipt is issued. Other options include stored-value cards (also called money-loaded cards) to try to sidestep restrictions, according to Tyler Beuerlein, Chairman of the Banking and Financial Services Committee for the National Cannabis Industry Association. He noted that it usually doesn’t end well for them.

Branded card networks forbid use for cannabis purchases; most debit cards are connected to them, making their use also verboten. Banks and credit unions don’t allow ATMs connected to them to be used for weed; instead, they require a third-party service. Financial institutions are subject to penalties and fines for illegal activities, and officers can even be held personally liable. 

Recently, in a clash of cannabis titans, one major marijuana company sued another,  alleging wire fraud, bank fraud, and criminal fraud by its competitor to gain “an unfair competitive advantage in the California cannabis delivery market.” Plaintiff Herban Industries, whose parent company DionyMed is based in Canada, sued Eaze Technologies, a California-based cannabis industry delivery company, for operating what it claims is an illegal credit and debit card transaction system. 

According to the lawsuit, “…Eaze conspires to disguise the cannabis transactions as transactions for dog toys, dive gear, carbonated drinks, drone components, and face creams, among other things, to obtain approval for these transactions.” The deception constitutes fraud, the lawsuit contends, which is conducted through shell companies in Cyprus and the United Kingdom.

It further asserts: “To ensure that the payments sent back to the retailers (and by extension, Eaze) are not flagged by Payment Card Companies or other financial institutions, Eaze ensures that they are transferred between and among various overseas entities, converted from U.S. dollars into euros, and then returned to the United States in euros from an entity based in Gibraltar called Spinwild, with which none of the retailers has ever actually done business. Further, Eaze executives used encrypted messaging programs to direct dispensaries to create phony invoices to Spinwild to create an ‘audit trail’ in the event of an inquiry from the banks.”

(Gina Coleman/Weedmaps)
Cannabis purchases are cash-only in the U.S. To take credit or debit card purchases, cannabis sellers are relying on offshore intermediaries, cashless ATMs, or cryptocurrencies to complete transactions.

The case demonstrates just how dangerous the threat of claims of illegality can be, according to Katy Young, Managing Partner at Ad Astra Law Group in San Francisco. A discovery period, in which companies must provide sensitive information about operations, could be damaging, especially if either company takes risks.

“The parties are both very sophisticated and I’ll bet they’ll enter a protective order that would not allow information to be released to the rest of the world,” Young said. “I don’t know if the court will grant it or not, but I’m sure they’ll ask. Anyone is a target because of their success. There’s a famous rap line, ‘mo’ money, mo’ problems’ and it’s absolutely true in the cannabis industry. Certainly, anyone who’s a market leader is going to be a target in this industry.”

To seek a financial solution for cannabis dispensaries in Arizona, where medical marijuana is legal, the state’s Republican Attorney General Mark Brnovich welcomed an intermediate financial technology, or fintech, company called Alta into its “regulatory sandbox” of entities allowed to test innovative financial products and services without full state licensure. Alta and its FinTech Sandbox operate as a private financial services club of sorts that provides digital currency for licensed medical cannabis providers and vendors. Members transfer cash for tokens, with $1 equal to one token. Members can pay each other using blockchain technology.

“There’s a cash problem in our industry and we hoped it would be solved by the traditional banking industry — so until it’s solved, we support the FinTech Sandbox,” said Tim Sultan, executive director of the Arizona Dispensaries Association. “It’s a great thing for innovation and it checks all the boxes.”

Sultan said the trade group typically doesn’t endorse any industry business and declined to do so when Alta approached it. After a second request, however, the association checked with its members and a majority were supportive of Alta’s request to write a letter to the Attorney General’s Office endorsing the establishment of the service for their benefit.

“We feel the real solution is descheduling marijuana and the next best step is passage of the SAFE Banking Act,” Sultan said, calling the service a “stopgap” solution for dispensaries. The Secure and Fair Enforcement (SAFE) Banking Act would allow financial institutions to handle money from cannabis businesses in states where medical or adult-use marijuana is legal.

Demitri Downing, founder and executive director of Arizona’s Marijuana Industry Trade Association, called the establishment of a state-endorsed payment system “too little, too late.”

“We could have used this seven years ago,” said Downing.  Companies that use third-party services are sometimes charged 15% to 20% service fees. 

While each transaction cost ranges from 2% and up, banks and credit unions also charge fees of anywhere from $175 to $5,000 per month on accounts to cover regulatory costs incurred in serving cannabis-related clients, Beuerlein said.

Other services that work with the industry include transaction service Cannapaid in Los Angeles, Dama Financial in San Francisco and Hypur, based in Scottsdale, Arizona. Hypur is an app that transfers money directly from the consumer’s account to the vendor. Hypur’s clients are banks and credit unions that work with the cannabis industry, among other nontraditional clients. The company is expanding nationally after operating on the West Coast for more than five years.

Cryptocurrency and Other Workarounds

The NCIA’s Beuerlein, who is also Executive Vice President of Business Development for Hypur, said that most large cannabis-related companies have banking affiliations, despite perceptions otherwise. However, banks don’t publicize those connections and it may be hard to find them without an intermediary. He doesn’t think a nontraditional solution will solve most cannabis vendors’ problems.

“(Cryptocurrency is) an added step that creates an additional compliance problem for any institution,” Beuerlein said. “They have to register as a money transmitter in the states they operate. And again, cryptocurrency by itself is a highly regulated currency industry to bank in — an extremely regulated industry and you’re compounding that by trying to regulate both areas.”

Beuerlein said fewer than 40 banks and credit unions work with cannabis companies on a large scale and Hypur represents half of them.

Meanwhile, in some states, customers are still grappling with the workarounds and the gymnastics that cannabis businesses perform to buy and sell with some ease. Debit and credit card receipts may bear names of companies with no seeming relation to the dispensary or delivery company, and those names can change frequently. 

As for Eaze and Herban Industries, on Sept. 11, 2019, a San Francisco Superior Court judge declined to dismiss the lawsuit at Eaze’s request. Instead, Herban may move forward on discovery, gaining access to Eaze business records. Michelle Sitton, Chief Marketing Officer, declined to comment on the case, saying that it is an “ongoing legal matter.”

DionyMed’s CEO Edward Fields said in a press release about the pending litigation:

 “We are pleased with the court’s decision to allow our lawsuit to proceed. We will continue until the direct-to-consumer cannabis delivery playing field is level for all market participants, and Eaze has compensated DionyMed for the massive damages its conduct has caused our company and shareholders.

“This result puts the boards of directors of cannabis companies everywhere on notice that good governance and regulatory compliance are table stakes for participation in the hyper-growth cannabis market.”

The battle between Eaze and Herban represent just one of the clashes at all stages of the cannabis legalization movement. However, pending legislation may go a long way toward preventing the shady legal workarounds that plague the industry. 

In a notable move on Sept. 25, 2019, the House of Representatives passed the SAFE Banking Act by a vote of 321-103, the first stand-alone reform bill that would protect banks that service the cannabis industry, and allow them access to legal financial services. The bill has yet to be approved by the Senate.  

Feature Image: Until Congress passes legislation to allow financial industries to conduct business with the cannabis industry, entrepreneurs are turning to financial technology solutions to accommodate non-cash transactions. Some are even turning to offshore businesses that illegally mask card-based transactions and move funds around worldwide.  (Gina Coleman/Weedmaps)

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House Approves Bill to Allow Cannabis Industry to Access Banks

The House of Representatives passed a standalone marijuana reform bill for the first time in history on Sept. 25, 2019.

The chamber advanced the legislation — which would protect banks that service the cannabis industry from being penalized by federal regulators in a vote of 321-103.

For six years, lawmakers have been pushing for the modest reform, which is seen as necessary to increase financial transparency and mitigate risks associated with operating on a largely cash-only basis — something many marijuana businesses must do because banks currently fear federal reprisal for taking them on as clients.

The Secure and Fair Enforcement (SAFE) Banking Act is sponsored by Democratic Rep. Ed Perlmutter of Colorado. It cleared the House Financial Services Committee in March 2019 and was officially scheduled for a floor vote in late September. The vote was held through a process known as suspension of the rules, meaning it required two-thirds of the chamber — 290 members if all were present — to approve it for passage.

While the House has approved historic cannabis amendments in the past, including one this summer that would protect all state marijuana programs from federal intervention, those have had to be renewed annually. This is the first time a stand-alone reform bill was approved in the chamber, and the policy will be permanently codified into law if the Senate follows suit and President Donald Trump signs it.

“If someone wants to oppose the legalization of marijuana, that’s their prerogative, but American voters have spoken and continue to speak and the fact is you can’t put the genie back in the bottle. Prohibition is over,” Perlmutter said in a floor debate prior to the vote. “Our bill is focused solely on taking cash off the streets and making our communities safe and only congress can take these steps to provide this certainty for businesses, employees and financial institutions across the country.”

Democratic Rep. Denny Heck of Washington made an impassioned case for the bill, sharing an anecdote about a security guard who worked for a cannabis shop who was killed on the job, and emphasizing that the legislation would mitigate the risks of violent crime at these businesses.

“You can be agnostic on the underlying policy of whether or not cannabis should be legal for either adult recreational use or to treat seizures, but you cannot be agnostic on the need to improve safety in this area,” he said.

“This bill is not only timely, but extremely necessary,” Democratic Rep. Barbara Lee of California said. “Right now the cannabis industry needs access to safe and effective banking immediately.”

Republican Rep. Patrick McHenry of North Carolina, ranking member of the House Financial Services Committee, raised concerns about the legislation and suggested that the bill would provide drug cartels with access to financial services. He was one of just three lawmakers who rose in opposition to the bill, with the remaining time allocated for opposition having been yielded to GOP supporters of the legislation.

The proposal hasn’t been without controversy, even among pro-reform advocates. After Democratic Majority Leader Steny Hoyer of Maryland announced his intent to put the bill on the floor by the end of the month, several leading advocacy groups including the American Civil Liberties Union (ACLU), Drug Policy Alliance, and Center for American Progress wrote a letter asking leadership to delay the vote until comprehensive legalization legislation passed.

The groups have expressed concerns to the Democratic Financial Services Committee Chair, Rep. Maxine Waters of California, that approving the banking bill first could jeopardize the chances of achieving more wide-ranging reform that addressed social equity issues such as legislation introduced by the Democratic Judiciary Committee Chair, Rep. Jerrold Nadler of New York. They said they were caught off guard when Hoyer announced the vote.

But as the vote approached, advocates and lawmakers wasted no time emphasizing the need to go further than the banking bill.

“I have long fought for criminal justice reform and deeply understand the need to fully address the historical racial and social inequities related to the criminalization of marijuana,” Waters said in a press release on Sept. 24. “I support legislation that deschedules marijuana federally, requires courts to expunge convictions for marijuana-related offenses, and provides assistance such as job training and reentry services for those who have been disproportionately affected by the war on drugs.”

She reiterated that point during debate on the floor, stating that the banking legislation “is but one important piece of what should be a comprehensive series of cannabis reform bills.”

Nadler also released a statement stating that while he would vote yes on the SAFE Banking Act, he is “committed to marking up [his legalization bill] and look[s] forward to working with reform advocates and my colleagues in this important effort going forward.”

Hoyer also weighed in on the need for broader reform in a statement on Wednesday.

“I am proud to bring this legislation to the Floor, but I believe it does not go far enough,” he said. 

“This must be a first step toward the decriminalization and de-scheduling of marijuana, which has led to the prosecution and incarceration of far too many of our fellow Americans for possession.”

Democratic Rep. Steve Cohen of Tennessee applauded the Judiciary Committee for announcing that it will hold a markup of comprehensive cannabis legalization following this vote.

Justin Strekal, Political Director of the National Organization for the Reform of Marijuana Laws (NORML), noted that much remains to be done in Congress.

“Today’s vote is a significant first step, but it must not be the last. Much more action will still need to be taken by lawmakers,” Strekal told Marijuana Moment. “In the Senate, we demand that lawmakers in the Senate Banking Committee hold true to their commitment to move expeditiously in support of similar federal reforms. And in the House, we anticipate additional efforts to move forward and pass comprehensive reform legislation like The MORE Act — which is sponsored by the Chairman of the House Judiciary Committee — in order to ultimately comport federal law with the new political and cultural realities surrounding marijuana.”

Steve Hawkins, Executive Director of the Marijuana Policy Project, said the “cannabis industry can no longer proceed without the same access to financial services that other legal companies are granted.”

“This decision is an indication that Congress is more willing than ever to support and take action on sensible cannabis policies,” Hawkins said. “The passage of the SAFE Banking Act improves the likelihood that other cannabis legislation will advance at the federal level. It is important to recognize that the SAFE Banking Act, if passed by the Senate and signed into law by the president, would strengthen efforts to increase the diversity of the cannabis industry.”

An advocate for the cannabis industry expressed his optimism for the banking reform bill to have benefits federally as well as locally.

“We applaud the House for approving this bipartisan solution to the cannabis banking problem, and we hope the Senate will move quickly to do the same,” Neal Levine, CEO of the Cannabis Trade Federation, said. “This vital legislation will have an immediate and positive impact, not only on the state-legal cannabis industry, but also on the many communities across the nation that have opted to embrace the regulation of cannabis.”

“Allowing lawful cannabis companies to access commercial banking services and end their reliance on cash will greatly improve public safety, increase transparency, and promote regulatory compliance,” he said.

Ahead of the vote, Democratic Rep. Joe Neguse of Colorado said that “only Congress can provide the certainty financial institutions need to start banking cannabis-related legitimate businesses” and he’s “proud to support the SAFE Banking Act today to support hard-working Coloradans and their families.”

Democratic Rep. Kendra Horn of Oklahoma, said in a floor speech Sept. 25 that current law is “endangering communities as well as inhibiting small businesses from growing.”

“This industry is bringing revenue to our state, creating small businesses and helping those suffer with physical illness to relieve their ailments,” she said. “The SAFE Banking Act supports this growing Oklahoma industry, our banks and works to keep Oklahomans that work in and around this industry safe.”

“Access to safe banking is a big deal for the businesses and employees in New Mexico who work in the cannabis industry. It’s why I’m a co-sponsor of the SAFE Banking Act and will be voting for it today,” said Democratic Rep. Deb Haaland of New Mexico.

Democratic Rep. Betty McCollum of Minnesota said that conflict “between state and federal law means legal, legitimate marijuana businesses are forced to operate on a cash-only basis, creating serious risks for employees, business owners, and communities. The SAFE Banking Act will fix this problem and I’m proud to support it.”

Many have viewed the banking proposal as the first step on the pathway to ending federal cannabis prohibition, and it’s consistent with an agenda outlined by Democratic Rep. Earl Blumenauer of Oregon in 2018 through which he suggested that committees advance incremental marijuana reforms under their respective jurisdictions, leading up to the eventual passage of a full legalization bill.

“We’re in this fix today because Congress has refused to provide the partnership and the leadership that the states demand,” Blumenauer said on the floor. ”The states aren’t waiting for us.”

“This is an important foundation, but it’s not the last step,” he said. We have important legislation that’s keyed up and ready to go. This approval today will provide momentum that we need for further reform that we all want and will make America safer and stronger.”

That said, while the vote signals that the House has a clear appetite for reform, it remains to be seen if the Republican-controlled Senate will approve the banking bill. Apparently anticipating that conservative lawmakers might not support the legislation as it passed out of committee, Perlmutter moved to add amendments in late September 2019 that were designed to broaden its GOP appeal.

Those provisions include clarifying that hemp and cannabidiol (CBD) businesses would also be protected and stipulating that federal regulators couldn’t target certain industries such as firearms dealers as a higher risk of fraud without valid reasoning.

That’s likely to endear Republican Senate Banking Committee Chair Mike Crapo of Idaho to the SAFE Banking Act. His panel held a hearing on the issue in July 2019, and the senator said he wants to have a vote on cannabis financial services legislation by the end of 2019, but also suggested at the time that it might not be a copy of Perlmutter’s bill.

The hemp-focused provisions are also intended to appeal to Republican Senate Majority Leader Mitch McConnell of Kentucky, who championed hemp’s federal legalization through the 2018 Farm Bill but has said he doesn’t support its “illicit cousin” marijuana.

The legislation might also face pushback from some Senate Democrats who share concerns expressed by advocacy groups that it’s important to move on comprehensive reform before tackling banking. Senate Minority Leader Chuck Schumer of New York, and Sens. Cory Booker of New Jersey, Kamala Harris of California, along with independent Sen. Bernie Sanders of Vermont, each recently indicated that their votes could possibly be contingent on advancing a justice-focused legalization bill.

Democratic Rep. Alexandria Ocasio-Cortez of New York suggested in late September that she also might withhold her vote for the same reasons, but she ultimately supported its passage.

Tough work still lies ahead for lawmakers and advocates if they hope to enact the banking bill into law this Congress but, for the moment, there’s an air of celebration as the House made history by voting to pass a standalone cannabis reform bill for the first time.

“Having worked alongside congressional leaders to resolve the cannabis industry’s banking access issues for over six years, it’s incredibly gratifying to see this strong bipartisan showing of support in today’s House vote,” Aaron Smith, executive director of the National Cannabis Industry Association, said. “Now, it’s time for the Senate to take swift action to approve the SAFE Banking Act so that this commonsense legislation can make its way to the President’s desk.”

“This bipartisan legislation is vital to protecting public safety, fostering transparency, and leveling the playing field for small businesses in the growing number of states with successful cannabis programs,” he said.

Feature Image: By a 321-103 vote, the House of Representatives passed the Secure and Fair Enforcement (SAFE) Banking Act on Sept. 25, 2019. While the law had support in the Democratic Party-led House, the legislation moves to the Republican-led Senate. (Gina Coleman/Weedmaps)

This article was republished from Marijuana Moment under a content syndication agreement. Read the original article here

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