In March 2014 only 51 banks and credit unions were willing to work with marijuana businesses. Fortunately for cannabusiness, the number is growing and has recently reached 301, most likely due to recreational legalization in Colorado, Alaska, Oregon, Washington, and the District of Columbia. However, most banks still won’t deal with legal cannabis businesses, believing the risks are too high. But things may be pushed forward this year when California and Nevada vote on whether to legalize recreational marijuana.
Dispensaries Working Around Overly Cautious Banks
Federal banks used to be forbidden to accept money linked to marijuana but the Treasury Department changed the rule a couple of years ago, allowing banks to deal with legal businesses complying with state law. This wasn’t enough to comfort banks and many don’t want to deal with anything to do with marijuana business. Marijuana dispensaries and shops have gotten around this by installing ATMs at their locations and paying for heightened security, including guards to protect the high cash flow they deal with, especially when it’s transported.
Benefits of Electronic Tax Payments
For some businesses in California, hundreds of thousands of dollars in taxes have needed to be physically delivered to tax offices in cash because there was no way for them to pay their taxes electronically. Washington seems to have worked out a better system for now that gives banks peace of mind. The state now publishes all sales, from growers and sellers, online. They also reveal any penalties or flagging a business has received for not obeying state regulations. This level of transparency offers banks peace of mind with the results in the statistics: according to the AP, in February of 2016, 75 percent of legal cannabis businesses paid taxes electronically or by check.
Banks Not Swayed By Legal Cannabis
Other states are still behind as far as banking is concerned. Amanda Averch, director of communications for The Colorado Bankers Association, said they know of only 12 banks willing to work with businesses in the cannabis industry. She says “they are serving the industry on a limited basis and doing so anonymously. They are doing so under close supervision of their regulators with the knowledge of their board of directors and their regulators have told them not to expand their business.”
Trends Moving Toward Electronic Payment
Oregon has already received $6.84 million in marijuana taxes in January and February this year. Over half of that money came through the front door in cash. Even with the progress made in Washington, the state still received $4 million of the $15 million in taxes as cash through the front door. This is being considered a safety concern. The state may soon be requiring liquor tax to be paid electronically. This may also be the way things head for marijuana tax in Washington.
As long as marijuana remains a Schedule 1 drug, banks will be cautious about getting involved with legal cannabis businesses. There is hope that if California votes to legalize recreational use this November, it will push Congress to change the current laws. With medicinal marijuana being legal in some form in half the country, it seems long overdue that these changes be made.