For marijuana dispensaries around the country, the days of doing business in cash — driving around with bill-stuffed envelopes to pay the rent, or showing up at a state revenue office with
It's not clear that the Obama administration's new guidance on pot-related banking is going to end them.
The banks were hoping the announcement would relieve them of the threat of prosecution should they open accounts for marijuana businesses,
"After a series of red lights, we expected this guidance to be a yellow one," Childears said. "At best, this amounts to 'serve these customers at your own risk' and it emphasizes all of the risks. This light is red."
Some dispensaries have managed to open accounts, sometimes by being less than forthcoming about their business, but for the most part banking has long been a headache for the cannabis industry. Because marijuana remains illegal under federal law, banks haven't been able to accept pot business without risking prosecution for money laundering or racketeering.
But 20 states now have medical marijuana laws on the books; two,
With the industry emerging from the underground, states want to track marijuana sales and collect taxes. It's a lot easier to do that when the businesses have bank accounts.
It's easier on the businesses, as well. For
The dispensary started operating on a cash basis after bouncing from bank to bank. Hollnagel said Conscious Care was always up front with banks about their business, and some, including
"From one day to the next they changed their policies," Hollnagel said. "If all your funds are frozen for two weeks it makes it difficult to run a business. You write a rent check on a Monday, get a call from the bank Tuesday saying the account's frozen, then a call from your landlord on Wednesday saying the check bounced."
Instead, Hollnagel or others at the dispensary wound up driving around with
"Hopefully with these changes we'll be able to go back to being a real business," he said.
Maybe, maybe not.
Under the guidance, banks must review state license applications for marijuana customers, request information about the business, develop an understanding of the types of products to be sold and monitor publicly available sources for any negative information about the business.
The guidance provided the banks with more than 20 "red flags" that may indicate a violation of state law. Among them: if a business receives substantially more revenue than its local competitors, deposits more cash than is in line with the amount of marijuana-related revenue it is reporting for federal and state tax purposes, or experiences a surge in activity by third parties offering goods or services such as equipment suppliers or shipping services.
If a marijuana-related business is seen engaging in international or interstate activity, such as the receipt of cash deposits from locations outside the state, that's problematic, too.
The banks need to file "suspicious activity reports" on their pot customers — designated either "marijuana limited," for those believed to be complying with the federal government's law-enforcement priorities, such as keeping pot away from children; "marijuana priority," for those the banks have questions about; or "marijuana termination," for those believed to be engaging in criminal activity.
"They'll have to have a real awareness of the activities of their customers," said
"We're constantly facing the threat that banks will shut us down," said
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