Cannabis Manual: Banking On Marijuana

Banking On Marijuana

Joshua Lee
3 min read
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After years of growth, the medical and recreational cannabis markets have become a major economic force in our nation, but these business owners still face the problem of finding a bank that will take their money.

This translates to an irritation for patients who have to pay for cannabis with cash in what is mostly a digital society and an outright danger for dispensaries that must sit on piles of cash—painting targets on their backs for criminals. It also causes headaches for business owners in areas the layman might not consider, like figuring out how to pay employees and keep track of your finances, or having to pay more for in-store security and armored cash delivery services. For the IRS and state tax and revenue department it means trusting dispensaries to honestly report their earnings. And according to Rep. Mark Amodei of Nevada, it makes the US Treasury a money launderer.

Speaking to a panel of Treasury officials last month,
Amodei broke it down: “Why are all the private sector people being told, ‘find a way to launder your money,’ but you have the government political subdivisions are [told], ‘pay the IRS in cash?’ As a matter of fact, some of them are overpaying them and getting Treasury checks back, so we’ve essentially laundered the money for them.”

He also pointed out that government entities are able to take cash from dispensaries for taxes and deposit that cash into federally-protected banks without scrutiny—essentially the same “drug” money that would be rejected by those institutions if it had come from the dispensaries themselves. In this light, the policy seems ludicrous.

It’s the result of old laws against money laundering that don’t quite work for the situation we find ourselves in today. Since cannabis is still illegal under federal law, risk-averse banks aren’t willing to accept cannabis businesses as clients, even in states like New Mexico, where it’s been legalized for medical use. Anti-money laundering laws
hold financial institutions accountable if they knowingly service businesses involved in criminal activity, which places them in a weird spot.

These institutions actually
want a piece of the pie, though, and have been pushing for years at lawmakers to introduce regulations that will allow them to accept marijuana money. Last February, they finally made some headway when the House Financial Services subcommittee took up the Secure and Fair Enforcement Banking Act of 2019 (SAFE Banking Act). If passed into law, it would protect banks and their employees from being prosecuted for providing financial services to cannabis businesses. It was formally filed in March and is cosponsored by over a quarter of the House of Representatives, meaning it actually has some legs.

While it might not be the sexiest topic to discuss from the world of cannabusiness, it’s certainly one of its most important aspects. The passing of a law like the SAFE Banking Act would be a huge milestone for the marijuana movement in general.

(Also: You could start using your credit cards at dispensaries. What a luxury!)
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