Marijuana Policy Project
Curved Papers

Banks Reluctant to Accept Cannabis Cash

News federal rules are intended to help legal marijuana stores in Colorado and dispensaries deal with their cash stashes.

Despite new federal rules, banks remain afraid of running afoul of drug money bans and routinely turn away piles of cash for transactions if the bills smell skunky from direct exposure to the booming marijuana trade.

Meanwhile, cash continues to pile up at legal pot establishments in Colorado and many of the medical marijuana states stymied by a lack of financial service options.

Unable to write checks, open up accounts or get loans to grow their businesses, today’s ganjapreneurs operate with tons of cash, often tightly sealed to keep away odors caused by proximity to their strong-smelling product.

Cash pays employees, sales tax and nearly every other expense. Regulations tightened up over the Drug War and Patriot Act years have left banks wary about doing business in states where legal marijuana thrives.

In an effort to break up these and other strange scenarios posed by legal recreational cannabis operations, the Obama administration has issued some new banking guidelines to help lenders navigate the emerging marijuana business landscape. The rules attempt to clarify the due diligence and reporting expectations for banks around customers from the marijuana business.

“Financial institutions can provide services to marijuana-related businesses in a manner consistent with their obligations to know their customers and to report possible criminal activity,” according to a statement on the guidelines, which were shared with financial institutions as well as federal law enforcement agencies.

Trish Regan, the Bloomberg TV correspondent and specialist in the financial matters around cannabis, points out the new guidelines may not open up the lending floodgates any time soon. Banks are still worried about breaking federal and state laws aimed at discouraging money laundering and protecting the money supply against manipulation by illegal operations.

While drug cartels and other multi-billion dollar black-market businesses manage to somehow use the international banking system to launder their profits, the relatively small legal marijuana trade still plays in cash. Ironic, but true.

Matt Chelsea

Matt Chelsea

Loves a nice morning buzz with his coffee as a bicycle commuter, counterculture scribe and dad.