A trade association that represents casinos across the U.S. is asking the federal government for clarity on rules relating to marijuana finances.
Under an Obama-era Treasury Department memo issued in 2014, banks and other financial institutions that serve the cannabis industry must file Suspicious Activity Reports (SARs) on those clients.
Now, casinos are asking the Trump administration whether they have a responsibility to file SARs on patrons whose finances are known or suspected to be derived from marijuana businesses.
“The current legal situation of marijuana-related businesses that are licensed in an increasing number of states yet are still illegal under federal law continues to present complexities and challenges for many types of financial institutions, including casinos,” the American Gaming Association (AGA) wrote this week in a letter to Treasury Sec. Steven Mnuchin.
“Accordingly, we seek clarification of the industry’s obligation in preparing SARs for individuals who own or are employed by such state-licensed marijuana-related businesses,” the letter from Geoff Freeman, AGA’s president and CEO, reads. “Specifically, we need to know whether and how casinos should use the 2014 marijuana guidance for filing SARs on patrons whose gaming funds appear or are known to be from marijuana-related businesses (e.g., whether to file a Marijuana Limited SAR).”
Among the companies AGA represents is the Las Vegas Sands Corp., whose founder, CEO and chairman is Sheldon Adelson, one of the largest funders of cannabis prohibition campaigns. Adelson, for example, provided the lion’s share of contributions to the failed effort to defeat Nevada’s marijuana legalization measure last fall. He also helped fund anti-legalization campaigns in Massachusetts and elsewhere.
Also on AGA’s core members list is Wynn Resorts Ltd. Its CEO, Steve Wynn, joined Adelson in donating to the Massachusetts legalization opposition campaign last year.
In June, MassRoots CEO Isaac Dietrich was “permanently banned” from gambling at Wynn Resorts because of the company’s involvement in developing technology for the marijuana industry, even though it doesn’t touch the plant directly.
“The customer due diligence procedures required by the Wynn Las Vegas compliance program identified your business as a marijuana related entity that derives its income from marijuana businesses,” Wynn compliance officer Larry Whelan wrote in an email to Dietrich. “Unfortunately, this puts your source of wealth in the marijuana field – as your business is being paid with proceeds from the sale of marijuana.”
The existing Treasury guidance “appears designed primarily for banks and other financial institutions that have corporate entity customers,” AGA’s Freeman wrote in the letter to Mnuchin. “Casino patrons, on the other hand, are individuals.”
Last week, Mnuchin testified before Congress that he would be happy to work on clarifying marijuana banking issues.
“When I was a banker I was familiar with this issue and we were very concerned for the regulatory issues of banking those types of clients despite the fact that it was legal,” he said. “I don’t have a view but I do understand the issue. We’re happy to work with you and we do think we need to figure out the regulatory solution.”
During his confirmation process earlier this year, Mnuchin told Sen. Maria Cantwell (D-WA) that cannabis industry banking and tax issues are “important” and pledged to “work with Congress and the President to determine which provisions of the current tax code should be retained, revised or eliminated to ensure that all individuals and businesses compete on a level playing field.”
He also said that, “If confirmed I will work with [Cantwell’s] office to review the 2014 FinCEN guidance.”
The new AGA letter was first reported by the National Law Journal.
It is not known when or whether the Treasury Department will issue the requested clarification to the gaming industry.
See below for the American Gaming Association’s letter to Mnuchin: