- The Washington Times - Friday, March 15, 2019

Steve Mnuchin, President Trump’s secretary of the Treasury, told senators Thursday that clashing state and federal marijuana laws are among “many, many, many complicated issues” facing the nation’s financial system.

Mr. Mnuchin declined to answer whether he wants to see those issues resolved, however, citing the same conflict at the center of the confusion.

Questioning the top Treasury official during a hearing on Capitol Hill, a member of the Senate Finance Committee asked whether he thought it was “fair” that state-licensed marijuana businesses are barred from claiming certain federal tax deductions.

“Let me just comment that this is a very complicated issue that impacts lots of things where there is a conflict between federal law and state law, and whether it’s me putting on my IRS hat where we have hundreds of thousands of dollars of cash coming in—this issue needs to be resolved one way or another because there are conflicts in so many regulations and rules and everything else,” Mr. Mnuchin answered Sen. Maria Cantwell, Washington state Democrat. “However it’s resolved, you’ve just described one of many, many, many complicated issues.”

Ms. Cantwell responded: “And so you would like to see that resolved?”

“There [are] lots of issues that we can’t give guidance on, or can’t change from Treasury, without dealing with the conflict,” Mr. Mnuchin replied.

“I think, to me, it’s an injustice that there’s a business that isn’t treated like other businesses when a state decides that that is a true business,” reacted Ms. Cantwell.

Thirty-three states, including Washington, have legalized marijuana for recreational or medicinal purposes. Marijuana is categorized under federal law as a Schedule 1 drug under the U.S. Controlled Substances Act, however, creating complications tax-related and otherwise.

The federal government prohibits businesses engaged in trafficking Schedule 1 drugs from claiming deductions, effectively keeping state-legal pot businesses from being eligible for tax credits afforded to other industries; physicians treating patients through the Department of Veterans Affairs are barred from recommending medical marijuana, meanwhile, limiting access for former service members seeking treatment.

Mr. Mnuchin is hardly the first of the federal government’s leading financial officials to acknowledge the conflict.

“I think it would be great to have clarity,” said Jerome Powell, the chairman of the Federal Reserve. “Financial institutions and their regulators and supervisors are in a very difficult position here with marijuana being illegal under federal law and legal under a growing number of state laws. It puts financial institutions in a very difficult place,” he said last month.

“Congress is going to have to act at the national level to legalize marijuana if they want those entities involved in that business to utilize the U.S. banking system,” Joseph Otting, the comptroller of the currency, said weeks earlier. “I would hope by 2020 we can get this issue resolved.”

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