The governor of Oregon has vetoed a bill that would have established a state task force to investigate the risks and benefits of creating a public bank that could, among other things, service the state’s marijuana industry.
Gov. Tina Kotek (D) disapproved the legislation earlier this month saying that while she supports the overall concept of studying a public bank, the bill has “several logistical challenges,” such as mandating that the Oregon Business Development Department (OBDD) oversee the task force when it is already managing more than 80 programs.
The proposal from Reps. Mark Gamba (D) and Jules Walters (D), along with Sen. Jeff Golden (D), cleared the legislature in June. The 19-member task force would have been comprised of lawmakers appointed by leadership and financial professionals appointed by the governor, as well as one member “with experience in management of a cannabis business.”
The State Public Bank Task Force would have been responsible for studying and making recommendations concerning the “potential benefits and harms from the bank to state and local jurisdictions and private industries, including potential benefits and harms of a state bank engaging in lending, payments or providing other public financial infrastructure related to” a variety of industries and financial services.
The vetoed bill would have been specifically mandated to investigate the risks and benefits of a public bank providing “financial services for cannabis businesses.”
A final report with the body’s findings and recommendations would have been due by September 1, 2024.
Outside of Oregon, there have been several legislative attempts in recent years to look into establishing public banks to work with the marijuana industry, which continues to be largely locked out of traditional financial services under federal prohibition.
New York lawmakers, for example, have filed several pieces of legislation to either create a public bank to service cannabis businesses or study the possibility of doing so.
Last year, the Congressional Research Service noted unsuccessful efforts in California to establish a public bank to serve the cannabis industry, with a bill to enact the reform clearing the Senate but failing in the Assembly in 2019.
In 2018, Los Angeles voters rejected a ballot measure that would have established a public bank in the city.
The attempts to provide financial relief for the industry come in response to widespread frustration over the fact that federal prohibition has restricted access to key banking services for licensed businesses in the majority of states.
Congressional efforts to prevent banks from being penalized by federal regulators for working with state-legal cannabis businesses have not yet yielded results, despite the overall bipartisan interest in resolving the issue. The House has passed reform legislation a number of times, but the Senate has proved to be an obstacle, with senators reaching a temporary impasse this session amid disagreements over one section of the Secure and Fair Enforcement (SAFE) Banking Act.
States have taken other steps to ameliorate the problem, however.
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For example, the governor of Maine signed a bill last month to allow licensed marijuana businesses to take state tax deductions as a partial workaround to the Internal Revenue Service (IRS) code known as 280E that prohibits such deductions at the federal level.
The governor of Illinois signed a budget bill in June that includes provisions that will allow licensed marijuana businesses to take state tax deductions that they’re currently prohibited from utilizing under the IRS code.
That same month, the governor of Connecticut also signed budget legislation that includes provisions to provide state-level tax relief to licensed marijuana businesses as a federal 280E workaround for the industry.
Also, the governor of New Jersey signed legislation in May to allow licensed marijuana businesses to deduct certain expenses on their state tax returns as a partial IRS 280E fix. Lawmakers in Iowa, New York, Pennsylvania and Virginia have similarly pursued tax relief for each of their state’s marijuana markets.
The New York Senate passed a bill in June to provide a 280E fix for New York City cannabis companies at the local level because the already-enacted statewide reform didn’t affect the city’s separate tax law. It also cleared the Assembly that month and has been returned to the Senate.
At the congressional level, Rep. Earl Blumenauer (D-OR) reintroduced a bill in May that would amend the IRS code to allow state-legal marijuana businesses to finally take federal tax deductions that are available to companies in other industries.
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