Banking Remains a Hurdle for Marijuana Dispensaries
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While marijuana legalization advocates cheer recent developments in Colorado and New York, the businesses charged with distributing medical marijuana to patients still face significant opposition from the banking industry. The problem: federal law prohibits banks from handling the proceeds from illegal activities, and marijuana remains a Schedule I drug – on par with heroin and ecstasy – thanks to the Controlled Substances Act of 1970.
Because of marijuana’s continued federal status, banks and credit card companies are hesitant to provide even the most basic services to medical marijuana merchants for fear of massive fines levied by federal regulators and law enforcement. As a result, dispensaries and other marijuana outlets have been forced to transport large sums of money in paper shopping bags to supermarkets in order to buy money orders, use personal bank accounts to manage their income, and provide elaborate security systems and other arrangements to ward off robberies while also contending with raids and shutdowns by local and federal law enforcement.
A mixed message regarding the Obama administration’s stance on marijuana was issued by the U.S. Department of Justice in an August 29, 2013 memo to all United States Attorneys. While the memo indicated that the Department would not crack down on legal marijuana as long as several regulatory measures were strictly enforced – like preventing the distribution of marijuana to minors – it failed to address the situation with banks, leaving business owners, legislators, and banking officials in the dark. After six members of Colorado’s congressional delegation sent a letter to the Treasury and Justice Department requesting clear-cut guidelines on how banks can legally handle the medical and recreational marijuana industry, a glimmer of resolution was promised by the Treasury Department’s Financial Crimes Enforcement Network, which plans to garner opinions on the matter from Treasury and Justice Department officials. Despite this effort, specific recommendations for formal guidelines have yet to be produced.