One of the many problems entrepreneur’s in the marijuana industry are having involve banking…
420 Intel reports:
Financial institutions are caught between state law that has legalised marijuana and federal law that bans it. Banks’ federal regulators don’t fully recognise such businesses and impose onerous reporting requirements on banks that deal with them.
Without bank accounts, the state’s burgeoning pot sector — 2500 licensed businesses with revenue of $US1 billion ($1.3bn) a year, paying $US130 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, buy equipment or pay taxes to the state. Reports abound of business owners refurbishing retired armoured bank trucks to transport money and hiring heavily armed security guards.
“I am concerned and we do hold our breath from a public-safety perspective,” said Colorado Attorney-General Cynthia Coffman. A Republican, she opposed the 2012 ballot referendum that legalised marijuana. But she is now trying to persuade regulators to allow banks to do business with companies handling the drug.
Lacking that clearance, “there are large amounts of cash floating in the system that makes money laundering very easy”, Ms Coffman said. “I believe it fuels the interest of cartels and traffickers in coming to Colorado and doing business. We definitely have seen an uptick in that activity.”
Other states that have legalised 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.
Federal law classifies marijuana as a top-tier illegal controlled substance.
The latest disappointment for Colorado officials came in January, when a federal judge dismissed a lawsuit filed by a credit union established with the help of the state to serve the cannabis industry that sought approval from federal banking regulators to set up a “master account”. Such an account is essential for financial institutions to do business with other banks and serve customers by taking deposits or issuing credit cards.
The judge said an order to overturn the banking regulators’ decision would “facilitate criminal activity”. He described the current situation as “untenable” and said he hoped “it will soon be addressed and resolved by congress”.