Top IRS Official Says Marijuana Banking Reform Would Help Feds ‘Get Paid’

The Internal Revenue Service (IRS) would like to get paid—and it’d help if the marijuana industry had access to banks like companies in other legal markets, an official with the federal department said. She also talked about unique issues related to federal tax deductions for cannabis businesses.

At an event hosted by UCLA’s Annual Tax Controversy Institute on Thursday, IRS’s Cassidy Collins talked about the “special type of collection challenge” that the agency faces when it comes to working with cannabis businesses while the product remains federally illegal.

While IRS isn’t taking a stand on federal marijuana policy, Collins said that the status quo leaves many cannabis businesses operating on a cash-only basis, creating complications for the agency, in part by making it harder for banks to “pay us.”

“The reason why [the marijuana industry is] cash intensive is twofold,” she said. “Number one, a lot of customers don’t want a paper trail showing that they’re buying marijuana, and number two, the hesitancy of banks to allow marijuana businesses to even bank with them.”

Of course, the reason why many financial institutions remain hesitant to take on cannabis companies as clients is because the plant is a strictly controlled substance under federal law.

“There’s been a number of legislative bills that have been introduced—and I am definitely not expressing any opinion personally or on behalf of the IRS about any pending or proposed legislation,” Collins, who is a senior counsel in the IRS Office of Chief Counsel, said. “But it is interesting to note that, if the law changed so that the marijuana businesses could have banks, that would make the IRS’s job to collect [taxes] a lot easier. As part of collection, we want the money. That’s our end goal there.”

A major part of what makes cannabis businesses unique is that they don’t qualify for traditional tax credits under an IRS code known as 280E. That policy “prohibits them from claiming deductions for business expenses because they’re technically being involved in drug trafficking,” Collins explained at the event, from which small excerpts of her comments were reported by Bloomberg.

There are some options available to lessen the burden on marijuana firms, however. At the end of the day, “IRS will work with marijuana companies because, again, we want to get paid,” Collins said.

One of the ways the agency works with marijuana business operators is to have them visit designated IRS “tax assistance centers” that accept cash payments in excess of $50,000. But the official warned businesses to “be prepared to be there for a little while” as the center checks—and double checks—the amount of cash being submitted.

“Revenue officers will assist the marijuana companies in paying us,” she said.

IRS officials could also help cannabis firms by having officials accompany them “to the bank in order to try to help the taxpayer secure a cashier’s payment to pay the IRS, as well as using money orders,” she said, adding that “our revenue officers are are wanting to work with the marijuana companies to help assist them to pay us.”

“When the revenue officers are there in person with the taxpayer, that could potentially help increase the likelihood that the bank will cooperate and help the taxpayer transition into a cashier’s check,” she continued. “And that has been a trend since this first became legal [at the state level], that more and more banks are allowing cannabis companies to bank with them.”

In a report published earlier this year, congressional researchers examined tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.

IRS, for its part, said last month that it expects the cannabis market to continue to grow, and it offered some tips to businesses on staying compliant with taxes while the plant remains federally prohibited.

As it stands, banks and credit unions are operating under 2014 guidance from the Financial Crimes Enforcement Network (FinCEN) that lays out reporting requirements for those that choose to service the marijuana industry.

Leaders in both chambers of Congress are working on legalization bills to end federal marijuana prohibition. But stakeholders are hopeful that, in the interim, legislators will enact modest marijuana banking reform. Legislation to protect financial institutions from being penalized for working with cannabis businesses passed the House for the fifth time last month.

Rodney Hood, a board member of the National Credit Union Administration, wrote in a Marijuana Moment op-ed this month that legalization is an inevitability—and it makes the most sense for government agencies to get ahead of the policy change to resolve banking complications.

IRS separately hosted a forum in August dedicated to tax policy for marijuana businesses and cryptocurrency.

Earlier this year, IRS Commissioner Charles Rettig told Congress that the agency would “prefer” for state-legal marijuana businesses to be able to pay taxes electronically, as the current largely cash-based system under federal cannabis prohibition is onerous and presents risks to workers.

Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.

IRS released updated guidance on tax policy for the marijuana industry last year, including instructions on how cannabis businesses that don’t have access to bank accounts can pay their tax bills using large amounts of cash.

The update appears to be responsive to a Treasury Department internal watchdog report that was released earlier in the year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”

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California children in great danger

California’s Governor Newsom has not wasted any time paying back Joe Biden for his help in defeating the recall effort.

The Biden Administration poured mountains of time and resources into California to keep this radical Governor in office.

And now, Newsom is forcing critical elements of Biden’s perverse sexual agenda into law.

The newest California law, AB 1184, will “allow” minors to conceal dangerous medical surgeries from their parents.

Yes, you read that right.

Preteen children are now able to schedule “gender transition” surgeries without the consent or knowledge of their parents!

Medical staff and even insurance companies are now BANNED from reporting any of these details to the parents of a child.

Of course, at 12 years old, it’s not really the child who’s pushing the “transgender” issue in their life.

It’s rogue school teachers, counselors and Hollywood celebrities coercing young children into questioning their own gender.

Now these child predators can send students under their care off for dangerous and permanent alterations to their bodies -- all kept secret from parents!

And there are some very dangerous people in the California school system.

One Orange County teacher was thankfully removed by parents when she bragged that her students were “pledging allegiance to the gay flag.”

As you know, the Biden Administration has made the sexual and gender abuse of children a top priority.

One of Biden’s first acts upon seizing the White House was to order all public school athletics to allow “transgender” boys to compete against the girls.

School districts across the country are coordinating with Biden's Department of Education to force Gender Corruption Theory into classrooms at every opportunity.

Parents and teachers who have protested these abusive policies have been threatened, harassed and even arrested.

Stripping parents of any power over the medical care of their children is clearly a key agenda for the Biden Administration.

So it’s no coincidence that Newsom signed this bill into law immediately after surviving the recall effort.

He owes Biden big for that win.

But, right now, the Homosexual Lobby and the White House are getting worried.

Public Advocate has led and inspired parental revolts in School Board meetings across the country.

Parents are speaking out in greater and greater numbers.

For instance, Texas just legally classified all “gender transitioning” procedures for children as criminal Child Abuse!

By adopting the legal language that Public Advocate has promoted for years, Texas has thrown a huge roadblock down to stop the advance of the radical Homosexual Agenda.

States across the country are now considering taking up similar language for their own child protection codes.

Texas and California now stand as diametrically opposed as they can on this issue.

In Texas, it is illegal even to remain silent if you know someone plans to mutilate a child just to “affirm gender identity.”

In California, it is illegal to even inform the parents that their young child is about to have life-altering surgery.

This is the choice that America as a nation faces.

And it’s up to Public Advocate -- to you and me -- to make sure our country protects our children.

Right now, we are collecting petitions from across the country in support of the Texas Child Abuse update.

We are bypassing Washington, D.C. entirely and going directly to local governments.

As one Ohio Mayor declared, the Homosexual Agenda for children is criminal and should be criminalized.

So please, click here to sign our petition to Stop the Transgender Child Abuse.

And after you sign, please consider chipping in a quick donation to fund our fight against this insidious agenda.

For the Family, Eugene Delgaudio HON. EUGENE DELGAUDIO President, Public Advocate of the U.S.

P.S. California's Governor has just signed a new bill into law that keeps gender mutilating surgeries for children secret from their parents!

These procedures are child abuse and should be criminalized everywhere.

Sign your petition right now to Stop the Transgender Abuse of Children.

And after you sign, please consider what you can spare to help us fight this abhorrent agenda.

*** Public Advocate is a non-profit 501(c)(4) that fights for the Family. As such, we do not endorse or oppose any candidate for office.

Contributions or gifts to Public Advocate of the U.S. are not tax-deductible. Public Advocate is a non-profit organization that fights the radical agenda of the Homosexual Lobby. Public Advocate receives no government funds. You may reach us at: Public Advocate, P.O. Box 1360, Merrifield, VA 22116; phone (703) 845-1808; https://www.publicadvocateusa.org.