All-Cash Business? Not So: Why It’s Getting Easier for Marijuana Shops to Open Bank Accounts
State and local officials in places that recently legalized marijuana are bracing for the arrival of a sector that largely runs on cash. They’re anxiously envisioning burglars targeting dispensaries and business owners showing up at tax offices with duffel bags full of money.
But the marijuana industry’s banking problems may be more manageable than many officials realize.
Just ask Washington state, which last year successfully pushed almost all legal marijuana businesses to open bank accounts and pay their taxes with a check or other non-cash method. Or Hawaii, which earlier this year announced a “cashless” system for buying medical marijuana, reliant on a technology analogous to PayPal.
“We’re definitely seeing more businesses in the industry getting banked every day,” said Aaron Smith, executive director of the National Cannabis Industry Association, a trade group. Despite the legal risk involved in serving the cannabis industry, almost 400 banks and credit unions now do, according to the U.S. Treasury — a number that has more than tripled since 2014.
That’s reassuring news for California, where sales of recreational pot start next month, as well as for Nevada, Maine and Massachusetts, where voters approved recreational marijuana sales last year, and Arkansas, Florida, Montana and North Dakota, where voters approved medicinal sales.
But the progress that has occurred in some legal markets remains fragile. The federal government still considers marijuana to be a dangerous, illegal drug. States can only permit marijuana sales — and financial institutions can only serve marijuana-related businesses — thanks to Obama-era guidelines that create wiggle room in federal law.
The Trump administration is rethinking those guidelines. “We’re looking at that very hard right now, we had a meeting yesterday and talked about it at some length,” Attorney General Jeff Sessions said at a press conference last week. “It’s my view that the use of marijuana is detrimental, and we should not give encouragement in any way to it, and it represents a federal violation, which is in the law and is subject to being enforced.”
Growing Access to Banking Services
Since the U.S. Treasury issued guidance on the issue in 2014, banks and credit unions have been able to do business with the marijuana industry without being prosecuted — so long as they monitor marijuana-related accounts closely to make sure they steer clear of Justice Department enforcement priorities, such as funding gang activity.
Local institutions that are chartered at the state level have been particularly willing to work with the industry.
In Oregon, where sales of recreational marijuana began in 2015, Salem-based Maps Credit Union decided to serve marijuana businesses after audits revealed some of its members were already in the industry. “It didn’t really square with our philosophy to kick members out,” said Shane Saunders, chief experience officer.
Taking on the new line of business required investments in staff, anti-money laundering software, and extra security at bank branches, said Rachel Pross, the credit union’s chief risk officer. Under the current federal guidance, Maps has to send a report on each marijuana-related account to the U.S. Treasury every 90 days, plus a report each time an account experiences a cash transaction of over $10,000.
Maps staff run background checks on marijuana-related business owners who want to open an account. They conduct regular, in-person inspections of the businesses whose accounts they manage, and they require business owners to share their quarterly financial statements.
Dispensaries that bank with Maps make most of their sales in cash, because credit- and debit-card processors typically won’t touch marijuana money. As of October, the credit union had handled $140 million in cash deposits from 375 marijuana-related accounts in 2017, Pross said. Some companies hold multiple accounts.
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