Springfield bank gets contract to process marijuana taxes
SPRINGFIELD, Ill. (AP) - A Springfield bank will process Illinois sales taxes from cash medical marijuana purchases after submitting the only bid for the contract.
Illinois National Bank executives said Thursday they decided to submit a bid after assurances from state and federal banking regulators regarding handling cash from Illinois' pilot medical marijuana program. They said it amounts to an extension of services it already provides the state.
The bank will process receipts for the sales tax of 7 cents per ounce from cash purchases, the (Springfield) State Journal-Register (http://bit.ly/1QyDmL0 ) reports. The contract allows the bank to charge transaction and service fees, and the sales tax receipts would be transferred to the state.
Illinois had been having trouble finding a bank or company to process cash for taxes and fees from the program. The state treasurer's office received no response to an official solicitation published last fall, so Illinois State Treasurer Michael Frerichs asked the financial industry for feedback.
Treasurer's office spokesman Greg Rivara said clarifications were made after the office got recommendations.
The marijuana industry tends to operate with cash only, and banks are wary because marijuana is considered an illegal drug by the federal government. The U.S. Treasury Department has issued guidance meant to clarify financial institutions can provide services to businesses selling marijuana.
The Illinois Bankers Association has given guidance to members on medical marijuana in Illinois. But president and CEO Linda Koch said bankers remain reluctant, with most banks waiting for Congress to address federal law.
"The fact remains that assisting in this business is a federal crime," Koch said in a statement.
Illinois National Bank executive vice president Patrick Phalen said it's simply collecting another state revenue form that happens to be from marijuana.
"At the end of the day, this is the state's money," Phalen said. "This is sales tax processing. That's what it is."
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Information from: The State Journal-Register, http://www.sj-r.com