TIME Drugs

House Votes to Help Pot Businesses Use Banks

Rethinking Pot Border Town
Customers gather at a medical-marijuana store on July 9, 2014. Zachary Kaufman—AP

But the measure may stall in the Senate

The House of Representatives on Wednesday passed one measure designed to help legitimate marijuana businesses gain access to the financial system, and rejected another that would have blocked them from doing so. But the votes may not force a resolution to the cannabis industry’s long-running fight to bank its cash.

The House easily approved an amendment to an appropriations bill that would bar regulators from punishing banks who transact with legal marijuana businesses. The measure, which passed 231-192, is designed to ease the fears of financial institutions, who mostly eschew pot clients, even in states that have relaxed marijuana laws, because the drug remains illegal under federal law.

In the other vote, the House rejected an amendment sponsored by a conservative Republican that would have blocked the implementation of Treasury Department guidelines, issued earlier this year, that gave a yellow light for banks to accept legitimate cannabis clients.

Industry activists hailed the votes as a major triumph. “This is a huge step forward for the legal cannabis industry,” Aaron Smith, executive director of the National Cannabis Industry Association, said in a statement. “Access to basic banking services is one of the most critical challenges facing legal cannabis businesses and the state agencies tasked with regulating them.”

Pro-pot votes in the Republican-controlled House are another marker of just how mainstream marijuana is becoming. But they are not necessarily a sign that the banking issue will be resolved anytime soon.

A bill to open the banking industry to pot clients would still have to clear the U.S. Senate, which is no easy feat for far less controversial legislation. There is no guarantee the measure will come up for a vote in the midst of a contentious election season, with control of the chamber up for grabs. And some legislators from both parties oppose opening the financial system to marijuana money. After the Treasury guidelines were issued, Sens. Dianne Feinstein (D-Calif.) and Charles Grassley (R-Iowa) co-authored a blistering letter arguing that the department had “severely undermined” its mission.

“Following the guidance may expose financial institutions to civil or criminal liability,” Feinstein and Grassley wrote. “Congress and the President may reconsider marijuana’s legality, but until federal law is changed, selling marijuana, laundering marijuana proceeds, and aiding and abetting those activities all remain illegal. Far from clarifying the obligations of financial institutions, FinCEN’s guidance appears to create uncertainty where none had existed beforehand.”

Multiple Democratic Senate aides did not immediately respond to questions about the measure’s chances of passage in the upper chamber. Without Congressional approval, banks are unlikely to take the risk of changing their policy.

TIME politics

Billionaire Richard Mellon Scaife Dies at 82

(PITTSBURGH) — Richard Mellon Scaife, the billionaire heir to the Mellon banking and oil fortune and a newspaper publisher who funded libertarian and conservative causes and various projects to discredit President Bill Clinton, has died. He was 82.

Scaife died early Friday at his home, his newspaper, the Pittsburgh Tribune-Review, reported. Scaife’s death comes less than two months after he announced in a first-person, front-page story in his Pittsburgh Tribune-Review that he had an untreatable form of cancer.

“Some who dislike me may rejoice at the news,” wrote Scaife, who acknowledged making political and other enemies. “Naturally, I can’t share their enthusiasm.”

He was the grand-nephew of Andrew Mellon, a banker and secretary of the Treasury who was involved with some of the biggest industrial companies of the early 20th century. Forbes magazine estimated Scaife’s net worth in 2013 at $1.4 billion.

The intensely private Scaife became widely known in the 1990s when first lady Hillary Rodham Clinton said her husband was being attacked by a “vast right-wing conspiracy.” White House staffers and other supporters suggested Scaife was playing a central role in the attack.

Several foundations controlled by Scaife gave millions of dollars to organizations run by critics of Clinton, including $1.7 million for a project at the conservative American Spectator magazine to dig up information about his role in the Whitewater real estate scandal.

Scaife rarely gave interviews, but in a sit-down with George magazine editor John F. Kennedy Jr. in 1998, he called President Clinton “an embarrassment.”

In the interview, Scaife denied that his money helped support an effort to hurt the president, but he suggested Clinton might be linked to the deaths of dozens of administration officials and associates, including White House Deputy Counsel Vince Foster and onetime Commerce Secretary Ron Brown. Foster’s death was determined to be a suicide; Brown died in a plane crash.

Scaife also accused Kenneth Starr, the independent counsel whose investigation led to Clinton’s impeachment in the Monica Lewinsky sex scandal, to be a “mole working for the Democrats.”

Scaife’s stance toward the Clintons softened years later. In an interview published in early 2008, he told Vanity Fair magazine he and the former president had a “very pleasant” lunch the previous summer, and “I never met such a charismatic man in my whole life.”

Clinton gave Scaife an autographed copy of his book, and Scaife said he later sent $100,000 to the Clinton Global Initiative. (Scaife also said philandering “is something that Bill Clinton and I have in common.”)

Scaife’s newspaper also endorsed Hillary Rodham Clinton’s bid for president in 2008.

Despite funding many causes dear to conservatives, Scaife was libertarian on many social issues. He supported Planned Parenthood and abortion rights, supported legalizing same-sex marriage and marijuana, and opposed the invasion of Iraq in 2003.

Scaife bought the Tribune-Review in suburban Pittsburgh in 1969, using its editorial pages to trumpet his views.

“I fell in love with newspapers as a boy, when my father bought me editions from around the country and abroad,” Scaife told readers in the column announcing his cancer diagnosis. “The day I became a newspaper publisher, buying the Tribune-Review, remains one of the proudest, happiest moments of my life.”

Scaife was a longtime supporter of Republicans, backing presidential candidate Barry Goldwater in 1964 and heavily funding the 1968 campaign of Richard Nixon.

In 1972, Scaife donated $1 million to Nixon in 334 separate checks to avoid paying gift taxes. After The Associated Press wrote a story about the money, Scaife insisted the Tribune-Review get rid of its AP service.

“He ordered us to come in and take out the wire machines that night,” Pat Minarcin, then AP’s Pittsburgh bureau chief, told The Wall Street Journal for a 1995 story.

Scaife also made headlines in recent years during a bitter divorce battle with Margaret Ritchie Battle Scaife, his second wife. The divorce was finalized in 2012. His first marriage, to Frances Gilmore Scaife, also ended in divorce.

A Pittsburgh native, Richard Mellon Scaife was born in 1932, the son of Sarah Cordelia Mellon and Alan Magee Scaife. His mother was an alcoholic, and his upbringing has been described as cold and unhappy. He and his sister were raised by nannies.

He went to Yale but was expelled during his freshman year after a he rolled a beer keg down a flight of stairs, breaking the legs of a classmate, according to a 1999 story in The Washington Post.

Scaife admitted to becoming an alcoholic, and he had a reputation for having a fiery temper. He reportedly quit drinking in 1990 after going to the Betty Ford Clinic.

The Tribune-Review reported Scaife is survived by a daughter, Jennie K. Scaife, a son, David N. Scaife, a daughter-in-law, Sara Scaife; and two grandchildren.

The newspaper reported that a private memorial service would be held at a later date.

TIME Management

JP Morgan CEO Has Throat Cancer

Jamie Dimon told employees the disease is “curable”

+ READ ARTICLE

Investment banking firm JP Morgan’s CEO Jamie Dimon told staff Tuesday that he has throat cancer.

“The good news is that the prognosis from my doctors is excellent, the cancer was caught quickly, and my condition is curable,” Dimon, CEO of the bank since 2005, said in a note to staff.

Dimon said the disease will require about eight weeks of radiation and chemotherapy treatment, CNBC reports.

“I feel very good now and will let all of you know if my health situation changes,” he said.

Dimon steered JP Morgan through the financial crisis but met with controversy after the bank was involved in a scandal in 2012, leading to billions of dollars in losses and calls for Dimon’s ouster. The notoriously blunt bank chairman was criticized for calling the fiasco a “tempest in a teapot.”

[CNBC]

MONEY Leisure

WATCH: George Takei Talks Marriage, Money, and the Right Way to Pronounce His Name

Actor George Takei tells Money's George Mannes how he handles his finances — and how he's fighting rising ticket prices on Broadway.

MONEY Careers

Work for the Man? That’s So Over, New College Grads Say

With banks dissing them and peers largely underemployed, Millennials are finding an alternative financial future.

Big companies still have many high-paying positions, and with the job market perking up those opportunities will expand. But young adults are still having trouble establishing basic financial security—or landing a decently paying entry-level job. Instead, they are forging different paths to financial success.

This search for alternatives starts with checking and saving. Banks haven’t figured out how to serve this new generation. Millennials have big debts from college, and instead of a single, steady full-time job, a recent grad may have four or five paying gigs. Banks can’t fit them into an existing box. But this new generation still needs credit and banking services.

Faced with this inflexibility, one third of Millennials seek to cut ties with traditional banks and financial companies, according to market researchers. Half say they are counting on start-up firms to overhaul how banks work, and 75% say they would prefer financial services from the likes of Google, Amazon, and PayPal. They are also turning to alternative financial firms like Square, Betterment, Robinhood, and Wealthfront to manage their payments and manage their money.

In their search for financial options, young adults are also finding new ways to launch their careers. Millennials have seen under-saved Boomers delay retirement, while corporations have shed workers and their peers are settling for jobs below their ability. As a solution, more twentysomethings are turning to entrepreneurship. Six in 10 recent college graduates are interested in starting a company, according to a new survey by CT Corp., a small business services firm. Those results mirror similar findings by other polls.

Entrepreneurial pursuits offer the potential to put individuals squarely in charge of their future. This is the mindset that the Thiel Foundation capitalizes on with its 20-under-20 fellowship, which seeks to develop entrepreneurs right out of high school and convince them they don’t need college or the student debt that comes with it.

The problem is that while many recent college graduates say they want to be their own boss, a large portion doesn’t really understand what that entails. So while 61% say they’d like to start a company, only 45% believe it’s feasible, CT found. Meanwhile, 67% display a knowledge gap around practical aspects like incorporating, registering a business name, securing a domain, and marketing their products or services.

Still, the entrepreneurial spirit runs deep in this crowd. One in five recent grads started a business while in college, and even among those who don’t believe they’ll ever start a company a third dream about doing so. More than half believe that being their own boss offers greater rewards and more financial security over the long run. Let’s hope they are right because in the new normal this is the path often taken.

TIME States

Colorado’s New Pot Banking Law Won’t Solve Cash Problems

Over 400 Marijuana Stores Ordered To Close As City Regulates Industry
Tim Blakeley, manager of Sunset Junction medical marijuana dispensary, shows marijuana plant buds on May 11, 2010 in Los Angeles, California. Kevork Djansezian—Getty Images

A new law signed by the governor offers a symbolic fix to a serious problem

Colorado Gov. John Hickenlooper signed a bill Friday designed to create the world’s first state-level banking system for legal cannabis companies, which have complained that their lack of access to basic banking services creates difficult and dangerous risks.

But the financial industry quickly cast doubt on whether the legislation will address issues faced by marijuana businesses in the state, where recreational pot became legal this year. Asked what it would accomplish, Colorado Bankers Association CEO Don Childears said: “Basically, absolutely nothing.”

“We don’t think it can be effective, and it can never get off the ground,” he said.

The bill allows legal marijuana shops to create a makeshift financial network that would help them gain access to credit and merchant services. A lack of access to banking has been the single biggest problem for Colorado’s recreational weed merchants, which have been legally operating in the state since Jan. 1. Forced to operate million-dollar businesses in cash, marijuana companies run the risk of robbery and face myriad logistical difficulties.

The problem with the bill is that it does nothing to change the reality that blocked pot shops from banks in the first place. Marijuana, which is classified as a Schedule I drug, remains illegal under federal law. As a result, financial institutions are wary of taking on cannabis companies as clients, even in states where some form of the drug is legal.

The legislation signed Friday allows pot businesses to petition the Federal Reserve for clearance. But even industry advocates acknowledge that the chances of obtaining a green light are slim. “It’s probably not going to work, but we’re trying,” said Mike Elliott, executive director of the Medical Marijuana Industry Group.

The point of the effort is simply to demonstrate that. The industry believes that the banking conundrum can only be solved in Washington—either by Congressional action, or by rescheduling marijuana as more and more states adopt permissive laws. The law signed Friday is an effort to show federal authorities whom Colorado officials have been petitioning for a solution that the state has done everything it can to resolve the issue.

“I don’t see anything coming out of it; it’s more symbolic than anything,” said Elan Nelson, who works in business development for Medicine Man, a legal retail shop in north Denver. “I think this starts the conversation. And if, for some reason, it works—great. We need this desperately.”

MONEY fees

No More ATM Fees? Sign Us Up!

B.A.E. Inc.—Alamy

FreeATM, which allows customers to watch a quick ad in lieu of paying the usual annoying $2 or $3 ATM fee, has big plans to expand, starting this summer.

Consumers run into plenty of tacked-on charges in today’s world—hello airline baggage fees!—but the ATM fee, small as it is, is up near the top in terms of generating aggravation. There’s just something patently absurd and beyond annoying about paying money to get your money.

According to a survey conducted on the behalf of TD Bank last summer, nonbank ATM fees were given the nod as the most frustrating bank fees, named by 38% of those polled. (Overdraft fees, which cost far more than the $2 or $3 charged by ATMs, came in second, with 27%.) In a previous survey, 77% of consumers said it is not OK for banks to charge ATM fees, and the majority of consumers said that a fair fee for using an ATM is … $0.

That’s just the amount consumers will incur when they an ATM service that plans on expanding rapidly throughout the country soon. First introduced in 2011 with a single ATM in New York City, the company—appropriately called FreeATM—announced that after the latest round of raising money from investors, it has plans for surcharge-free ATMs to open in 20 New York neighborhoods on the same (yet to be determined) day in August 2014.

In lieu of a fee for using an out-of-network ATM, customers will be shown a 15- to 20-second targeted ad on a screen, and then be able to use the machine fee-free. It doesn’t matter if your card is prepaid or a regular bank debit card; FreeATM won’t add a fee. (While the machine won’t charge you a fee, the bank or other service that issued the card might tack on its own fee, so watch out.) The plan is for around 250 ATMs in the New York metro area to start using the platform within a year.

Clinton Townsend, founder and owner of FreeATM, originally had the idea that his company would own and operate ATMs. That vision has evolved, however, and now FreeATM is partnering with major cash-machine operators Everything ATM, ATM Money Machine Inc., and NationalLink. The latter operates roughly 10,000 ATMs around the country.

“We have demand from operators from Boston to Hawaii, but we’re trying to control the roll-out,” Townsend said via e-mail. “We’re targeting the week of August 18th to launch. This may move around by a few days or so, as we are coordinating several venues to be unveiled at the same time.”

(MORE: How Do I Pick a Bank?)

If and when such ATMs arrive in your neck of the woods, you can say goodbye to the out-of-network ATM fee, which averages $2.60 nationally, according to Bankrate.com study. It’ll be great to get rid of one of life’s most annoying fees. Now we just have to wait and see how annoying the targeted ads are that are replacing the fees.

Bear in mind that there are other ways to avoid ATM fees, the most obvious of which is only using machines that are in your network. Also, a couple of convenience stores actively promote the fact that they have fee-free ATMs—a wise move considering that it gives consumers an extra reason to swing by and maybe buy some chips, jerky, and soda and gas up the car while they’re at it. Last fall, the Sheetz chain announced a partnership with PNC Bank to host 480 surcharge-free ATMs in its stores in Maryland, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia. Wawa, meanwhile, has hosted surcharge-free ATMs for years, and celebrated its one billionth free ATM withdrawal back in 2010.

Again, while these machines don’t tack on fees, your bank might for using an out-of-network ATM. Check your bank policy before finding a $2 or $3 fee on your monthly statement—because while all fees are annoying, they’re especially annoying and unpleasant when they come as a surprise.

MONEY Odd Spending

There’s Probably No Cash in Your Wallet. Could That Cost You?

140528_EM_NoCash_1
Nikola Bilic—Alamy

If you walk around with little or no cash, you're in the majority. But choosing plastic over cash for everyday purchases could mean you'll spend more in the long run.

According to two recent surveys, the majority of consumers walk around with little or no cash. Most prefer plastic for the sake of convenience and safety. There could be an unfortunate side effect, however, based on the theory that people spend more when making purchases with credit or debit cards rather than cash.

Last week, VoucherCloud, a UK-based deals and coupon site, released the results of a survey of 2,341 Americans indicating that “over half of American citizens (57%) ‘never’ carry cash, instead relying solely on credit and debit cards to pay for their daily expenses.” Only 10% of survey participants said that they “always” carry cash, and another 33% said that they carried cash “rarely” or “sometimes.”

Could this be true? Do the majority of American adults you pass on the street really have empty wallets? There’s reason for skepticism. Let’s start with the question that prompted the responses: “How often do you carry cash with you on an everyday basis?” Many may read this question as essentially asking, Do you always carry cash? That’s different than asking if you usually keep a few greenbacks in your pocket.

What’s more, another recent survey, from Bankrate, focused on the same subject but ended up with very different results. In its survey, which asked, “How much cash do you usually carry on a daily basis?” Bankrate found that only 9% selected the option “Don’t carry cash/does not apply.”

There’s no denying that folks carry a lot less cash than they used to. According to Bankrate’s data, more than three-quarters of people generally walk around with $50 or less: 40% usually have less than $20 on hand, 29% say $20 to $50, and 9% typically go cashless (or “does not apply,” whatever that means).

In both surveys, participants said they felt safer that way. The top reasons given in the VoucherCloud survey were “concerns over safety and the risk of theft” (65%) and “risk of losing my wallet and/or its contents” (53%). Women tend to carry less cash than men—77% of female respondents said they keep $50 or less handy, versus 61% of men—perhaps owing to the fact that women “may prefer to carry less cash than men so as to reduce the risk of being a target for criminal activity,” according to Bankrate chief financial analyst Greg McBride.

As for whether it’s wise to carry little or no cash, the surveys come to very different conclusions. When asked, “Do you spend more or less when paying by card instead of cash?” 84% of VoucherCloud respondents said they do more damage when spending with plastic. “While using payment cards rather than cash is a widespread modern phenomenon, because it is so quick and convenient, it can become a dangerous trend for some of us!” VoucherCloud’s Matthew Wood warned. “It’s much harder to keep up with what you’re spending as you don’t see the money leave your hands and, because it’s just a little piece of plastic, it doesn’t feel like a real exchange. It’s easy to get carried away.”

There’s plenty of research out there to back up this theory. Generally speaking, the idea is accepted that handing over cash feels more tangible and “hurts” more compared to quickly swiping a card. Many budget and personal finance experts recommend going cash only and maybe even freezing credit and debit cards in a block of ice as a strategy to limit one’s spending.

The Bankrate study, on the other hand, makes the argument that people today think of any cash as “petty cash” that will inevitably be spent quickly and carelessly. So it stands to reason that people don’t want to carry around too much. “If you’re carrying more, maybe you feel you have more, and you feel you spend more easily,” Joydeep Srivastava, a professor of marketing at the University of Maryland, told Bankrate. To many consumers, cash on hand is as good as cash spent. “As soon as you draw it from the ATM, it’s like you’ve already spent it,” said Srivastava. “You don’t feel that pang of guilt of spending it anymore.”

So which theory is true? If you’re trying to avoid unnecessary spending, should your primary mode of paying be plastic or cash? And by extension, is it best to carry lots, some, or no cash? The truth is, the answers probably vary a lot from person to person.

If you’re the type who is constantly piling up credit card debt or getting hit with overdraft fees on a debit card, it may be time to put the plastic on ice and limit yourself to cash-only expenditures. And it’s probably best to try to plan out your daily expenses and limit how much cash you carry around. Because if you have more cash than you need, you know you’ll just spend it.

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