Tuesday, January 14, 2014

Banks Saying NO to Marijuana - Legal or Not

One of the biggest problems facing legalized marijuana in Washington continues to be banks—or rather, the lack thereof. Even though Washington and Colorado have legalized marijuana for recreational use, it still remains against federal law. As such, banks and credit unions are afraid to provide traditional banking services to marijuana businesses. They fear large fines, criminal prosecution, and other federal violations.

This has created businesses that are entirely cash-based and ripe for criminal activity. As a result, businesses have begun installing panic buttons for robberies and security cameras to help protect their businesses and employees. Some have even tried to use personal bank accounts to help direct the flow of their cash.

But financial institutions aren't playing. They have shut down many of these accounts after managers decided that these individuals posed too much of a risk. BECU is the largest credit union in the State of Washington and it has shut down over 20 accounts associated with the legal marijuana trade.

This has made doing business awkward—and dangerous. For example, Kunkel, an owner of 5 marijuana dispensaries in Washington had to hand deliver a bag of cash worth over $51,000 to the Washington State Department of Revenue in Seattle.

Richard Riese, a senior vice president for regulatory compliance at the American Bankers Association wants clear guidelines established for banks. He wants banks and credit agencies to be assured that they would not be aiding and abetting criminal activity by providing financial services to legal marijuana businesses. Until such guidelines and assurances are provided, banks are turning a cold shoulder to Washington's pot industry.