Even as protesters decrying how out of touch bankers are with everyday Americans are occupying Wall Street, home of America’s banking industry, many financial institutions in states where medical marijuana is legal are refusing to do business with cannabis dispensaries.
Sixteen states and the District of Columbia have legalized medicinal marijuana, but possession or sale of cannabis for any use is still illegal under federal law. It is this disconnect that is giving rise to an unwillingness on the part of many banks to do business with the marijuana collectives.
The banks fear that federal regulators will target them, reports Kathryn Glass at Fox Business, because the federal government says that banks which do business with dispensaries are supporting activities that are illegal under federal law.
“The Department is committed to the enforcement of the Controlled Substances Act in all states,” the Department of Justice said in a memo issued to U.S. Attorneys last June. “Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime that provides a significant source of revenue to large scale criminal enterprises, gangs, and cartels.”
If it sounds like the federal government is living in the past, desperately clinging to the shattered shards of a worldview that is now invalid, unsupported by science and crumbling beneath their feet, then congratulations for paying attention.
The June memo was intended to “clarify” an earlier federal memo from October 2009, which had given the appearance of leniency in enforcement of federal laws when it comes to medical marijuana in states where it has been legalized. That memo instructed U.S. Atttorneys that they “should not focus federal resources in your States on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.”
But with the new apparent crackdown from the Justice Department on medical marijuana providers, banks have been scared away from opening and maintaining accounts for dispensaries.
Jill Lamoureux, who owns four dispensaries in Colorado, said she’s been through two credit unions and two banks, the most recent of which, Colorado Springs State Bank, will close her account on September 30.
“There is an unclear regulatory situation,” said John Whitten, senior vice president of Colorado Springs State Bank. “It became unmanageable in a lot of respects and that was unfortunate.”
Whitten claimed the bank does not “want” to have to close their medical marijuana merchant accounts, but one thing banks and regulators agree upon is that until the differences in state and federal law regarding medical marijuana are reconciled, the shops will continue to have trouble finding a banker.
“How should the banks approach it?” Whitten asked. “It’s illegal at the federal level and then legal and the state level, and yet the banks have an obligation to take care of their communities. These businesses are part of the communities, so how do we reconcile that?”
Meanwhile, Lamoureux said she’d found a bank to accept her deposits, but she wouldn’t name it for fear that any media attention would cause the bank to close her account. She thinks the banks may have shied away from servicing dispensaries because, in Colorado at least, they are not yet profitable enough for the banks to risk unwelcome federal attention.
“In California the banking problem doesn’t seem to be as bad,” Lamoureux said. “Their dispensaries may not be regulated as much and they are more profitable.”
U.S. Rep. Jared Polis (D-Colorado) has introduced a bill in the House of Representatives that would shift regulatory responsibility for dispensaries away from the federal government to the states, and would eliminate the need for banks to report the shops’ activities to the federal government.
Polis said the roadblocks to the success of what he called a “fast-growing” industry should be removed so that the businesses can get back to “providing jobs and tax revenues right when our economy needs it.”
“If the federal government would simply end prohibition, then we wouldn’t be engaged in any of this nitwittery whatsoever,” said Allen St. Pierre, executive director of the National Organization for the Reform of Marijuana Laws (NORML). “The federal government created this mess, and they’re about the only entity that can fix it.”