States legalizing pot but federal laws restrict cannabusiness’ bank access

Nine states will decide

On Election Day this November, voters in nine states, including California and Florida, will have the opportunity to legalize the sale of marijuana.

Should these measures pass, the total number of states in the nation that allow the sales of marijuana will rise to 34, a number that business owners hope will force the federal government to continue to relax prohibitive banking restrictions that leave many without a place to deposit funds.

The issue at hand

The issue lies in the fact that while states have legalized the sale of marijuana within their borders, the sale and possession of marijuana is still treated as a federal crime.

In 2014, the US Department of Justice notified banks that they would not face prosecution for serving the industry, but, at the same time, required them to report drug-related crimes.

Given the obvious paradox, the banking industry which depends heavily on federal, rather than state, regulation has been slow to adopt the marijuana industry as a business partner.

How states are getting around it

Although the number of banks that work with such businesses has increased 45 percent in the last year, to over 300, many feel that it’s simply not enough to meet the needs of a growth industry that has had to rely on cash for many of its sales.

While some states, such as Oregon and Colorado, have tried to create in-state solutions, their reliance on the respective branches of the Federal Reserve for access has led them to be ineffective or inefficient at best, with customers having to change banks often when they come under increased scrutiny, or having to be less than honest about the types of services they actually offer.

For some, this has extended to actually laundering their funds, washing the bills with laundry detergent to attempt to rid the bills of the distinctive smell associated with their product, before attempting to make deposits.

It’s not over yet

Without sufficient access to banking, the industry, which is projected to earn as much as $23 billion dollars next year, is largely a cash one. That reliance on cash has led to not only a need for better supports for banking access, but also a need for increased security at individual stores.

According to Reuters, there have been almost 600 robberies in Denver alone since the legalization of sales three years ago. For business owners who are legitimized by the state, yet marginalized by the federal government for the nature of the business they operate, such a situation is not only becoming increasingly more frustrating, but more dangerous as well.

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