Oregon has approved marijuana sales. The problem these businesses have is that they are cash only, and those proceeds cannot be deposited in commercial banks because the banks are federally regulated and MJ is still an illegal substance, etc.
The asshole* who owns the dispensary on the next corner has started buying houses that come up for sale. I’m assuming that he is paying cash and will probably flip them, effectively getting rid of the drug proceeds.
Does this amount to money laundering? What is the status of the money once the former homeowners have it? Are they then unable to bank the cash? Can they be pursued by the feds for abetting the money laundering or receiving proceeds of a drug sale?
*He’s not an asshole because he sells pot. He was an asshole before that, and remains an asshole, so lets not start down that road, okay?
I am not a lawyer, but I worked in New Jersey real estate for 26 years. Any cash used to buy a house has to be documented. The HUD-1 form, filed at each closing, shows how the money was obtained and how it was paid off. If the cash cannot be documented, it’s highly unlikely the sale will proceed.
Anything remotely suspicious and the IRS and the Feds will come knocking on your door.
It’s not money laundering, at least it’s not at the state level, because the money isn’t proceeds of a crime. That’s what money laundering is, taking money that was obtained illegally and pushing it through a legitimate enterprise as if it were obtained legally. So you invest in restaurant and take the $10,000 you made from hijacking a truck and you inflate your restaurant receipts to show an additional $10,000 in income, and that money is disbursed to you as a profit. But if the money was obtained legally then it can’t be laundered.
It isn’t illegal. One bank did set up to allow businesses to deposit in Oregon but decided that the overhead in conforming with federal laws wasn’t within their capacity.
So I’m guessing that the fed won’t be interested in what happens at a local level then?
What happens when the original homeowner tries to bank the cash from the sale? Is a bank that’s not set up for that going to balk, or will they not even ask where it came from? If you go through a realtor, doesn’t the money have to be placed in an escrow account?
It looks like form HUD-1 is a mortgage form. Its first box is “Type of Loan”, and I don’t see an option for “none”. Does form HUD-1 really still need to be filled out even if no loan is being used? I don’t see how it would even make sense to fill it out for a purely cash-up-front transaction.
Are you addressing me? I’m just asking the questions because I’m curious about the cause and effect of states legalizing something that the fed has not. I’ve not said anything to warrant confrontation.
Buying houses in cash isn’t money laundering, unless your neighbor is buying the houses in an attempt to disguise the original source of his income. Since growing wacky tobacky is legal where you are, he has no reason to hide how he earns his cash.
It’s not illegal to keep your money somewhere other than a bank. AFAIK, as long as your neighbor is paying his taxes and declaring his income, he’s in the clear, even if all of his money is both earned and spent in cash.
Don’t know really, but considering the can of worms that opens up it’s not likely to be tested anytime soon.
I can’t tell you the law, but someone who is paid in cash for a legitimate exchange is in the clear legally, assuming they’re not part of the original criminal act, and a reasonable person would not assume the money was obtained illegally. However, they have to fill out forms indicating where the cash came from. And if they try to avoid that they could end up having the money seized by civil forfeiture. There’s a thread about that somewhere. I don’t know if the government can or will come after the money if it turns out be proceeds of a crime when the person paid has committed no crime.
You asked whether a specific person you know, whom you describe as a longtime asshole, is engaged in criminal activity. If it was meant as a general question about the law, then I’m sorry for having misread.
Now, I’m no law-talking guy, but here’s part the Federal statute that would control:
So it seems to me that if this guy takes the proceeds of his business, which it clearly legal at the state level and not legal at the Federal level, and invests it somehow, and the proceeds of the investments have anything to do with continuing the illegal enterprise, I think a Federal case against him would be pretty open-and-shut. I have no idea what the case law is, but the phrase “promote the carrying on of specified unlawful activity” seems quite broad to me.
But then, I’m no expert in these matters, and it seems that the Federal government doesn’t have an interest in getting involved in these kinds of cases, from what the newspapers tell me.
ETA: and if the outcome of doing this is to be able to put the proceeds of the house sales in the bank, that also seems a pretty clear violation of (b)(i) and (ii).
I live in Eugene, Oregon, where perhaps pretty soon you’ll be able to see a marijuana dispensary at every corner. It has not even been one month and they are sprouting up like weeds all over the city and our neighbor town of Springfield. This situation with the banks has been all over the news lately. This “asshole” that you mention here has just found a way to get around his (temporary) problem. I think that eventually the banks will welcome all dispensary owners and their money with open arms. I don’t think that what he’s doing is money laundering since the money was not acquired illegally…not anymore.
I’m thinking that with the steadily increasing acceptance of marijuana as a socially acceptable vice the feds are going to avoid any high profile confrontations with public business people that would likely give the pro mj group even a minor boost.
Selling marijuana is illegal in the United States. Only an act of the United States Congress can make it legal. That’s why the banks are reluctant to deal with this.
I’m completely aware as to the reasons why. My point is that with time, some banks and credit unions will do business with them. A handful already is. In the mean time, finding ways to not sit on large sums of cash for these dispensary owners will be quite a dilemma, won’t it? And so they will turn to other ways - like this idiot in Portland did.