Colorado Marijuana banking update
Last week with great fanfare it was announced that mbank, an Oregon bank focusing on the marijuana industry, would be accepting new accounts in Colorado. Unfortunately the fanfare was short lived as they pulled out less than a week after their announcement. (see Denver post article: http://www.denverpost.com/business/ci_27398018/mbank-pulls-out-colorado-week-after-taking-cannabis ) There is speculation that this occurred as a result of pressure from the FDIC ( see article ).
So what does this mean for the industry? There is still not a viable Bank solution for the marijuana industry. Some smaller banks are covertly banking certain marijuana related business but banking remains a guarded secret.
What about the recent coop? (see article ) The coop solution has the same issue as mbank had needing either approval from the FDIC or NCUA for depository insurance and still needs access to the federal banking system (check clearing, overnight window, etc…) Unfortunately the coop model is dead in the water without federal changes
Will the federal government make changes to allow banking? Eric Holder, the current attorney general, has been very friendly to the marijuana industry in both enforcement and memos to try to encourage banking for the industry. The candidate to replace Eric Holder does not appear to be so willing ( see article). She stated that she does not hold the same views as Eric Holder or President Obama and believes it should remain classified as a controlled substance
Will Congress make changes to allow Marijuana Banking? This is highly unlikely as there does not appear a will by the majority of representatives to pass any meaningful legislation around this issue. Colorado and California legislatures have tried putting forth bills on multiple occasions that have gone nowhere
What is the solution? As more states pass laws allowing both recreational and medical marijuana over time the policy will change at the federal level. This is going to take a while though (my guestimate is we are at least 5 years out from a meaningful solution)
Are there options? The status quo will remain for the time being with marijuana industry participants hopefully locating a bank that doesn’t ask too many questions. Fortunately on the lending side there are players like Fairview Commercial lending (a Colorado Hard Money Lender) stepping in to provide some financing alternatives on the real estate side.