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Marijuana businesses need banks

By David McMillin · Bankrate.com
Thursday, February 6, 2014
Posted: 2 pm ET

Buying and selling marijuana is now legal in Colorado and Washington, but cannabis businesses are still not able to enjoy one key benefit: access to the banking industry.

Because the drug has not been legalized on a federal level, banks will not handle money from marijuana dispensaries. The federal-versus-state legal issues mean these business owners have no checking accounts, no checks and no easy way to protect their money.

Taylor West, deputy director of the National Cannabis Industry Association, estimates that approximately half of the organization's members currently operate on a cash-only basis. Without access to traditional services at banks, West says these businesses are forced to convert cash into money orders to pay utility bills.

Dispensaries also must try to track expenses and revenues without the convenience of online banking tools, which creates serious headaches for any business owner. Some have attempted to use their personal bank accounts, but West says that can only last for so long.

"Once banks put the pieces together, the owners wind up getting shut out and returning to the challenges of conducting cash-only business," West says.

Outside of accounting purposes and taxes, West highlights the biggest problem of an all-cash model: safety.

"It's difficult for consumers and dangerous for staff," West says.

West says that some businesses are sending out three or four employees at the same time with bags of cash to confuse potential criminals who may prey on the easy targets.

"These businesses are working very hard to be responsible members of their communities, but they're targets for crime due to the all-cash operations," West says.

Despite these initial issues, a report from The New York Times indicates that help may be on the way. Attorney General Eric Holder recently gave the industry a sign of hope in comments at the University of Virginia when he told an audience that all the cash should be able to be deposited in banks. While the comments were somewhat vague, the cannabis industry greeted the prospect of help with celebration.

"Even though the attorney general didn't offer a hard timeline or specifics, we were thrilled he acknowledged that this is something that needs to be addressed," West says. "This is a constant stressor for people who are trying to run responsible businesses."

Other voices in Washington, D.C., are showing support for creating guidance for banks to work with marijuana businesses. Rep. Denny Heck, D-Wash., and Rep. Ed Perlmutter, D-Colo., recently introduced legislation to reform banking regulation, which has received support from 16 other bipartisan lawmakers.

Do you think the government will be able to act fast enough to help legal marijuana business owners manage their money?

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