This week, the president of IRS (Internal Revenue Service) disclosed to Congress that the State agency would ‘prefer’ that state-legal cannabis business to offset their taxes electronically. This is because the current widely cash-dependent system under state marijuana prohibition is arduous and avails risks to personnel.
On Tuesday, during the oversight hearing with the House Appropriations Financial Services and General Government Subcommission, IRS Chief Charles Rettig was pushed to explain the missing banking services for cannabis ventures and the steps he has taken to normalize the marijuana market.
Representative Joyce David, serving as the co-president of the Congressional Marijuana Commission, asserted that barring cannabis from conventional financial services is ineffective for both the IRS and businesses. It also avails an opportunity for abuse and fraud, as well as the opportunity for criminal activities such as stealing and robbing.
Rettig responded that the Internal Revenue Service would opt for direct deposits rather than cash payments.
He added that it’s a security concern for the revenue department, especially to their employees in taxpayer assistance spots since they receive these cash payments. He further explained that the department has set up special tax institutions to receive funds before physically transporting them.
The commissioner also said that money is naturally interchangeable. The department can’t determine whether it’s illegal or legal.
In 2019, Steven Mnuchin (former state Treasury Secretary) said that he would like Congress to pass legislation that addresses the marijuana banking problem and he pointed out that IRS had to create ‘cash rooms’ for depositing taxes.
This week,cannabis finances came up during the confirmation hearing for Joe Biden’s choice for assistant treasury secretary.
Senator Cortez Masto Catherine asked the appointee, Adeyemo Adewale, whether he thinks 2014 FinCEN’s (Financial Crimes Enforcement Network) guidance should be amended to set estimations for banking institutions that offer services to marijuana-related sectors and what steps he plans to take to address that issue.