Without banks to take their money, medical marijuana dispensaries have been forced into a cash-only situation that leaves them with stacks of cash and makes them targets for robberies. That was the case in July when robbers at a Bakersfield, Calif. medical marijuana center killed two employees.
“Colorado and Washington are in the process of implementing citizen initiatives permitting the production, processing, and sale of marijuana to adults for recreational use, in compliance with state law,” the letter says. “Access to the banking system by these state-licensed businesses is a necessary component in ensuring a highly regulated marijuana system that will accurately track funds, prevent criminal involvement and promote public safety. In order to achieve the mutual federal and state goal of establishing tightly controlled marijuana regulatory systems, we urge you to issue inter-agency guidance that will allow legal, licensed marijuana businesses access to the banking system.”
According to the Denver Business Journal, the letter was sent to secretary of the Treasury; Ben Bernanke, chairman of the Board of Governors of the Federal Reserve; Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation; among others.
There are a few banks that currently take medical marijuana accounts, but they are few and far between and cannabis businesses are often dropped even after years of being reliable customers. Other options medical cannabis (and soon-to-be retail) cannabis have are few and far between. Some obscure their accounts by calling their business a wellness center, while others use online credit-card companies like the popular iPad-based Square to give customers options. But most rely on cash transactions, and are often forced to pay employees in cash on payday.
The problem comes when filling for taxes. Many cannabis businesses that are now cash-only have told us that it’s a nightmare trying to work through funds and receipts and pay taxes with cash instead of writing a check.
But safety is the biggest issue, and both governors recognize that. “This creates an unnecessary inviting target for criminal activity,” the letter reads.
The letter also argues that allowing banks to open accounts with marijuana businesses would allow for better tracking of funds and prevent diversion – two things that Deputy U.S. Attorney James Cole now says will keep state-legal marijuana businesses out of the cross hairs of federal prosecutors.
“Permitting normal banking relationships for state marijuana licensees would also assure a means of tracking the flow of funds, and prevent diversion of marijuana proceeds to illegal activities and to states and foreign jurisdictions in which marijuana remains illegal.”
There is hope. The Justice department has said they’ve been discussing a fix to the issue over recent months. And if Congress ever gets back to work, there’s a bill before them from Colorado Rep. Ed Perlmutter and Washington Rep. Denny Heck. Their plan is simple: it allows banks, credit unions and other “depository institutions” to hold accounts with pot businesses. The banks/credit unions/credit card companies would be immune from prosecution simply because their client is a legal pot shop.
“We need to address the public safety, crime and lost tax revenue associated when these legal and regulated businesses are operating in a cash-only system,” Perlmutter said at the time. “We also need to provide financial institutions assurance that they can make their own business decisions related to legal, financial transactions without fear of regulatory penalties or criminal prosecution.”