How Pot Money Fuels Colorado Democrats
It’s probably unusual for political contributors to thank a candidate for taking their money, but that’s what Mike Elliott, executive director for the Marijuana Industry Group, did at a pot-industry fundraiser for U.S. Rep. Ed Perlmutter last month.
“We really appreciate the fact we can come here and show you how much we appreciate you showing up and talking about it and giving you donations,” Elliott told Perlmutter, D-Colo., and a group of about 50 marijuana business owners. “We want to do what every other industry does and, as time goes by, the fear of the unknown is going away and more people are going to be following your footsteps.”
As Elliott spoke, organizers were collecting envelopes filled with contribution checks. Perlmutter was ready to talk about his legislation to allow the industry to bank pot proceeds, which are legal under Colorado law but still raise money laundering concerns with banks because marijuana remains illegal at the federal level.
“I want to thank everyone for being willing to step up and help me,” Perlmutter said, standing in front of the offices of Vicente Sederberg, Colorado’s major marijuana industry law firm. “I have been talking about the banking problem because you got the federal law going one direction and the state law, especially in Colorado and Washington, going the other direction.”
Attorneys disagree about pot contributions
Federal money laundering laws prohibit banks from accepting marijuana proceeds because the drug is still illegal under federal law. But federal elected officials, like Perlmutter and several other members of the Colorado delegation, increasingly are accepting contributions from marijuana business owners.
Carolyn Short, a retired lawyer who chairs Keep AZ Drug Free and opposed marijuana legalization efforts, said federal law doesn’t prohibit the contributions, but it probably should.
“I don’t think money from illegal activities, whether child porn or marijuana, should be used to fund political campaigns, and I think most people agree with me,” she said. “The whole idea behind the money laundering statute that prohibits banks from taking in the money is you don’t want to encourage or abet criminal activity.”
Other legal experts say there is no prohibition in either campaign or criminal laws that prevent politicians from accepting marijuana money — even if it’s illegal to sell pot under federal law. Like much of the burgeoning marijuana legalization push, there are gray areas and conflicting laws that politicians and regulators have yet to settle.
Federal Election Commission rules prohibit candidates from taking money from corporations, unions, national banks, government contractors and foreign entities, but do not address proceeds from a business that might operate legally in states but violate federal laws. In an email exchange, a spokeswoman wrote the FEC has not received any requests for legal guidance about marijuana contributions.
But former Denver City Attorney David Fine, who helped set up Denver’s medical marijuana regulations and now practices election law, said that is likely to change.
“It’s a novel question and one that the FEC has not opined on,” he said in a phone interview.
Richard Collins, who teaches constitutional law at the University of Colorado, said federal directives to banks and other entities after Colorado’s legalization and the First Amendment right of political speech make it acceptable for politicians to take marijuana money in states where the drug is sold legally.
“I’m confident a candidate is in the clear,” he said.
The Obama administration has told banks that they can accept marijuana money if the businesses comply with state law and make sure the drugs don’t get into the hands of children or leave the state, Collins said. Most banks have refused the deposits, determining they can’t monitor the actions of their depositors that closely.
But Collins said he doesn’t believe political candidates have to monitor their contributors.
“As long as the activity within the state is legal, the contribution is legal,” he said.
Pot political power grows
The Colorado congressional delegation, which opposed Colorado’s recreational legalization initiative in 2012, are nevertheless starting to represent their HTC-selling constituents’ needs in Washington, D.C.
In past two years, FEC records show total pot-related contributions — either from industry PACs or individuals who operate marijuana-related businesses — to Colorado federal candidates were about $20,000. It is nearly impossible to determine a comprehensive amount because only a handful of contributors note their marijuana connections on FEC forms.
But pot’s political clout is increasing. Elliott said the July fundraiser for Perlmutter collected about $20,000. FEC disclosures for that period are due until Oct. 15. And in July, Perlmutter said there was another pot-industry fundraiser before the July 1 event.
Elliott said the marijuana industry, which in Colorado is valued at about $600 million and growing, mostly focused on state races in the past, but have turned their attention to federal campaigns because of the banking issue.
“Federal banking laws make the marijuana business federally illegal, and that issue is so dire that someone will die over this issue,” he said in phone interview last week. “People in California have already died, and it’s just a matter time before it happens here. It’s a huge public safety issue.”
Colorado delegation pushes legislation to help pot industry
Perlmutter repeatedly has pushed legislation that would allow banks to accept marijuana funds where state law allows legal sales. He said it’s a public safety issue because dispensary owners who have a lot of cash and marijuana are attractive targets for robbers.
“The cash component — you know better than I do — subjects you to various armed robberies,” he told the crowd on a cool July evening in Denver. “There is always the white-collar aspect of skimming, tax evasion, but really the violent crime (aspect). We’re trying to straighten this up.”
Danielle Radovich Piper, Perlmutter’s chief of staff , said at the fundraiser the campaign does not accept cash contributions, so once the money is in bank accounts, it’s legal for them to accept.
Perlmutter’s campaign managerrefused to discuss the issue last week.
“Neither Ed or the campaign discuss fundraising activities,” Chris Kennedy wrote in an email. “The campaign fully complies with all FEC guidelines, laws and reporting deadlines.”
U.S. Rep. Diana DeGette, D-Colo., also sponsored a bill that would help the industry. The bill would prohibit federal officials from enforcing the Controlled Substances Act in states that have legalized marijuana.
U.S. Sen. Mark Udall, D-Colo., has collected the most marijuana money so far, according to Watchdog.org’s review of FEC records, but that may change in the next filing. Neither Udall nor DeGette’s staff returned calls and emails seeking comment.
Perlmutter’s and DeGette’s bills haven’t made it through Congress, but Perlmutter predicted the days of marijuana prohibition in the United States are numbered.
“Prohibition is over one state at a time, but prohibition is falling by the wayside, and our job is to get so it is working,” he told supporters at the fundraiser.
Reposted with permission by Reagangirl.com on 8/27/14