Medical marijuana industry thriving

The medical marijuana industry is beginning to show its age.

After humble California beginnings in 1996, 15 states and the District of  Columbia now have legalized marijuana use for ill patients who have a doctor’s  recommendation.

Medical marijuana has been found to help with chronic pain, nausea and other  symptoms of diseases including cancer, muscular dystrophy and AIDS. Nearly 25  million Americans are medically eligible to buy marijuana.

Sales are expected to hit $1.7 billion this year. Just last week, a San  Francisco-based outfit, the ArcView Group, formed the industry’s first  investment network to link cannabis entrepreneurs to qualified investors with  seed money.

“It doesn’t take a rocket scientist to realize that this industry is growing  and that there are untold riches to be made here,” said Troy Dayton, chief  executive of the ArcView Group.

In coming months, Arizona, New Jersey, Rhode Island and the District of  Columbia will launch programs, joining eight states where medical marijuana is  sold legally. Those states are California, Colorado, Maine, Michigan, Montana,  Oregon, Washington and New Mexico.

But around the country, some law enforcement officials have expressed concern  that medical marijuana could be obtained by relatively healthy people who could  get a recommendation from a physician by lying or overstating their pain and  suffering.

They also worry that some dispensaries could grow more marijuana than their  patients could consume, leaving an excess that could make its way to the illegal  market.

While legal for medical purposes in many states, marijuana remains an illegal  controlled substance under federal law, although since 2009, the Justice  Department has said it won’t prosecute medical marijuana use within the bounds  of  states’ laws.

With more than 1,500 growing operations and dispensaries nationwide, the  medical marijuana industry has defied the recession and prospered even as the  broader economy stalled.

Regulatory friction

Strong public support has helped fuel the industry’s eastward expansion, but  that growth has also brought growing pains.

Industry reps say section 280E of the Internal Revenue Code unfairly bars  legal medical marijuana operations from deducting business expenses from their  income taxes. Dispensaries nationwide are facing Internal Revenue Service audits  over  the measure.

Other dispensaries have found that banks won’t maintain their business  accounts, fearing federal scrutiny over reporting requirements for ties to  businesses that violate federal law.

The National Cannabis Industry Association was formed late last year to help  address these concerns. The trade group recently held its first national lobby  day, visiting lawmakers on Capitol Hill as part of a push for greater  legislative clout.

“These kinds of days are necessary, because it puts a face on the industry,”  said Rep. Jared Polis, D-Colo., one of the industry’s staunchest supporters.

While 76 percent of medical marijuana sales nationally are generated in  California, Colorado has the nation’s fastest-growing market. More than 131,000  Coloradans are registered marijuana patients, up from 7,000 in 2008.

Colorado Dispensary Services, which operates three dispensaries and three  commercial growing operations, has had five different bank accounts in 3 1/2  years, owing to state regulatory friction. Owner Jill Lamoureux said it’s  impossible to  manage nearly 50 employees and $120,000 in monthly payroll  without a bank account. State regulators have taken notice.

“These regulators need to see our bank accounts, and if we do not have access  to banking, it makes it impossible for them to regulate,” Lamoureux said.  “Frustrating is an understatement to say how difficult it is to run a business”  without  banking services.

Last year, Polis and seven other Democratic lawmakers wrote a letter asking  the U.S. Treasury to declare that it wouldn’t target banks with account holders  that operate in compliance with state medical marijuana laws. Federal regulators  deferred, arguing that banks must make those calls themselves.

Polis said he’ll introduce legislation soon that clarifies banks’  responsibilities when dealing with marijuana dispensaries. He said support for  the issue is bipartisan, citing Republican Reps. Ron Paul of Texas and Dana  Rohrabacher of  California as sympathetic to the industry’s plight.
via : Kansas City Star

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