A long-time concern of the industry is being brought to our attention more and more often in recent months – the lack of banking services available to cannabis businesses, and those who work directly with such businesses. In the last couple of years there has been a lot of talk about the subject, but not nearly enough action. Aside from the U.S. Department of Treasury expressing permission for banks to work with marijuana industry businesses, there has not been much effort made towards making banks comfortable with the idea.
Considering marijuana is illegal on a federal level, banks risk being charged simply for working with a cannabis business, which has led to the majority of them refusing to offer services – and they tend to terminate accounts when they find out they are associated with the industry. Currently there are less than 3% of the over 10,000 federally regulated banks – about 300 in total – that are actually willing to take on the risk of working with the growing industry.
“(In) these states, the majority of legal marijuana businesses, and businesses that provide services to them, are all but barred from participating in the financial system,” reads the letter. “As a result, many legal businesses are forced to operate in cash, which jeopardizes community safety, limits economic growth and greatly expands the opportunity for tax fraud.”
Now, Senator Elizabeth Warren of Massachusetts, who has been an advocate for the legal industry before, has lent a helping hand to write a letter that was sent to the Financial Crimes Enforcement Network (FinCEN) explaining why withholding access to banking services is potentially detrimental to the industry and our communities.
“To be clear, these legitimate, indirect businesses have been unable to open checking accounts and accept credit cards or checks. In some cases they have also lost access to existing accounts, such as retirement accounts, and have been forced to pay their employees, taxes, and bills in cash. Locking lawyers, landlords, plumbers, electricians, security companies, and the like out of the nation’s banking and finance systems serves no one’s interest.”
It’s not only dispensaries, growers and processors who are having trouble acquiring bank accounts – in some cases businesses who are associated with cannabis are also seeing their bank accounts closed without notice. This means that not only is the majority of the cannabis industry operating cash only, but many other businesses are now as well – and there is no good reason that ancillary businesses are having their accounts closed out, but they are.
“What the industry needs is a sustainable solution that services the entire industry instead of tinkering around the edges,” Taylor said. “You don’t have to be fully in favor of legalized marijuana to know that it helps no one to force these businesses outside the banking system.”
For now, the letter is being reviewed by FinCEN, who will hopefully decide to issue further guidance to banks as far as dealing with cannabis businesses. While they know that they are the least likely to be charged with federal crimes, it is still a possibility – and most banks have said that until there is a permanent solution, in writing, that they are not likely to participate in the growing industry. We can only hope that the government decides that ensuring a multi-billion dollar industry has somewhere to store their revenue, but it seems more likely that the government will continue to sit back and stay out of it.