Over 130 metric tons of marijuana was sold in Colorado during 2014, netting a whopping $573 million in sales. When that much “green” switches hands, the need for safe money transfer and storage is obvious. Unfortunately, that hasn’t been the case due to reluctance of federally-insured banks to work with cannabis businesses.
Despite the guidance of President Obama for banks to work with the cannabis industry, these financial institutions have been slow to follow due to concerns regarding money laundering. This has forced many marijuana dispensaries to function on a cash-only basis which is both dangerous and costly, and undermines the integrity of the industry.
A new bill, The Marijuana Business Access to Banking Act of 2015, aims to address the issue by restricting discrimination based on cannabis affiliation alone. Banks would no longer be allowed to restrict service, or otherwise penalize cannabis businesses provided that the business itself remains compliant with state regulations.
The bill would also protect banking institutions and all employees from federal intervention should a cannabis business fail to meet regulations, and promises to refrain from asset forfeiture of supplies rented or to income earned from cannabis businesses.
Included in the bill is the requirement for financial institutions to report any suspicious activity in accordance with the Financial Crimes Enforcement Network, but promises not to interfere with banking services provided to the cannabis business during the investigation.
Good for Dispensaries
This is great news for marijuana dispensaries. As cash-only operations, they are often forced to pay employees and vendors in cash, making transparency and accurate record keeping much more difficult. They are also required to pay an additional 10 percent on their federal employee withholding tax for paying in cash instead of electronically.
Dispensaries with large sums of cash on hand make the business vulnerable to robbery, as well. Dispensary owners and their employees often take extra precautionary measures to ensure everyone is safe including constant video surveillance, photo ID imaging and the tried-and-true buddy system anytime someone approaches or leaves a store.
Some dispensaries use what are called “shadow” banking systems, which allows them to accept credit and debit card payments, though the process borders on money laundering with potentially major consequences. These banking services handle dispensary money for them as a third party service, which is why the words “marijuana”, “dispensary” or “cannabis” will never show up on a credit card or bank statement.
Some marijuana dispensaries currently use ATMs in their stores, which has helped ensure that customers can purchase marijuana, but excessive fees for using the machines makes them less-than-ideal for the average marijuana consumer.
With this new legislation, marijuana dispensaries may finally be able to bank at insured locations and banks may finally be able to let them do it without fear of federal repercussions. The Marijuana Business Access to Banking Act of 2015 aims to help make that happen. Kind Meds welcomes this new development.
If you have questions or concerns about anything marijuana related, please contact us at Kinds Meds today.