Ah, the legal marijuana industry. What an amazing way to make a buck. For those of us budding ganjapreneurs on the outside looking in with our noses pressed firmly against the pot shop’s storefront glass, it looks like a dream job. But for the majority of those actually running a marijuana dispensary business, in regards to handling their assets, it’s somewhat of a nightmare.

And although having pot pay your bills in some manner is still an enterprise in which most of us that are passionate about the sticky stuff still fantasize about pursuing, there’s still the fact that banks deem pot shop operators to be taboo. Which makes the industry as a whole a little less appealing for prospective pot business operators. But just a little.

I mean let’s face it, folks. We’re talking about the much-loved marijuana plant here. So, the inability to accept any form of payment other than cash; having to fulfill your payroll with cash; being forced to pay vendors with cash; having no other choice but to pay your utility bills, your taxes, and all the other overhead that is associated with operating a business with……yup, you guessed it, cash, is just a mere inconvenience for marijuana dispensary owners, especially with all things considered, right?

Well, for some ganjapreneurs, not having the option to work with a local financial institution could mean the difference between staying in the bud business or being forced to abandon something they’re devoted to.

But are the banks themselves the ones to blame for the pot-business ban? Or are they merely following laws set in place by our beloved federal government that are designed to ensnare criminals?

Well, due to the fact that marijuana is recognized by the federal government as a Schedule 1 controlled substance, it is still a federal crime to use, possess, or distribute it. So, in turn, any handling of proceeds from marijuana sales activates anti-money laundering laws for banks.

The Bank Secrecy Act, which is put into effect by the Financial Crimes Enforcement Network (FinCEN), commands that banks keep an eye on customer accounts for any suspicious activity associated with crime or terrorism. Said Act obliges banks to inspect their customers and to neither carelessly nor consciously do business with federal lawbreakers, i.e. pot shops, regardless of the fact that they’ve received a state-authorized business license to legally sell marijuana.

FinCEN’s directive is that financial institutions file Suspicious Activity Reports (SARs) with the federal government when they distinguish or deduce that one of their account holders is a party to any illegal goings-on. (You know, like running a legal pot shop for instance.) Unfortunately for pot shop operators, it’s these very laws that are the grounds in which nearly all banks are employing to deny accounts to marijuana businesses and even go as far as to directly close pot shop-related bank accounts once they’ve been discovered.

But hope may be on the horizon for those eager to keep their pot shop boat afloat, all thanks to guidance issued by The Department of Treasury in early 2014 for banks that want to do business with the marijuana industry. Said guidelines basically spell out that banks can make their financial services available to marijuana businesses without the fear of violating federal regulations, so long as they hold fast to the following edict:

  • Corroborate with the state’s authorities that a business is properly licensed and registered to operate a pot shop.
  • Assess the prospective customers pot shop license application and associated records in order to make certain that the business in question is indeed officially licensed by the state to operate its pot-related business.
  • Acquire existing information with reference to the pot shop business and any interconnected parties from the state’s powers that be.
  • Awareness regarding the normal and expected activity for the marijuana business, including the products they sell and their customer base type.
  • Screen openly available sources for unfavorable information concerning the pot-related business account holder and any interrelated parties.

A good number of the abovementioned rules are common sense and pertain to, at least to some extent, all bank accounts. But they also produce considerable overheads for the banks that are willing to get involved due to the number of people it would take to do the work. And regular monitoring of pot shop business bank accounts can be quite costly and banks are passing on said expenses to their pot shop business customers. Adhering to these statutes makes the simple act of preserving a bank account pricey for individuals in the legal marijuana industry fortunate to have an account.

To this point, a mere handful of small credit unions and banks, by and large in Colorado and Washington, have made their financial services available to pot shop businesses offering them the opportunity to open accounts. But for the most part, bigger financial institutions have chose to wait until the federal laws regarding doing business with pot shop owners are abundantly clear and have eliminated any fear of being prosecuted on a federal level.

Yeah, like that’s going to happen in the near future, right?

Never say never.