One of the largest cash generator in US now encounters with a dilemma between fed’s regulation and banks support for business. Even though it has been two years after Colorado fully legalized the sale of marijuana, most banks here still don’t offer services to the businesses involved. The Marijuana Companies are still struggling in managing its huge amount of cash and cannot fully utilize the financial institutions’ ability to improve the efficiency and also expand the business when it is necessary.
Without bank accounts, the state’s burgeoning pot sector—2,500 licensed businesses with revenue of $1 billion a year, paying $130 million in taxes—can’t accept credit or debit cards from customers, Colorado officials say. Marijuana-related businesses instead use cash to pay their employees, purchase equipment or pay taxes to the state. Reports abound of business owners refurbishing retired armored bank trucks to transport money and hiring heavily armed security guards.
Other states that have legalized recreational marijuana share similar concerns. On March 27, four Democratic senators from three states pressed federal financial regulators to issue clear joint regulatory guidelines for banking services to marijuana businesses. The letter was sent to six banking agencies. While, Federal law classifies marijuana as a top-tier illegal controlled substance. Those banks stand between state laws and federal laws typically has no clues to go business with Marijuana Companies.
The Obama administration has issued some guidelines for banks that choose to deal with marijuana businesses in states where it is legal. In a 2013 memo, the Justice Department indicated it wouldn’t challenge states’ marijuana laws as long as they don’t conflict with its enforcement priorities.
The Treasury Department’s Financial Crimes Enforcement Network, or FinCen, implicitly suggested that it didn’t consider banks’ dealings with marijuana businesses illegal in states like Colorado by laying out rules saying financial institutions can conduct such transactions as long as they file “suspicious activity reports.” These are forms banks are generally required to file when they face a suspected incident of money laundering or fraud, a process that can be complex and costly.
The Justice Department and Treasury rules have had only a limited impact, because they don’t absolve banks from rules set by other federal agencies.
Still, those guidelines have been enough to encourage a small number of community banks and credit unions in Colorado to start offering basic banking services to marijuana businesses. Andrew Freedman, director of marijuana policy coordination for Democratic Gov. John Hickenlooper, declined to say how many, saying most preferred to keep a low profile.