What’s really going on with Marijuana banking

It seems like many Colorado legislatures and many government officials have been smoking quite a bit of the marijuana that is now legal in Colorado. All of the above seem to be tripping differently. This week it was announced that Colorado was setting up a co-op to enable banking for the marijuana industry. This is great news for the industry; finally the marijuana industry will have access to the banking system.

Unfortunately the high is short lived. Why? The co-op is dependent on approval from the federal government (both for insurance on deposits and access to the federal reserve (money transfers, check cashing, overnight window, etc..).   How tough should it be to get approval? There was a memo in February that basically outlined how a bank could “legally” bank the marijuana industry (at least this is the interpretation of many in the industry that read the memo). The fed blessing should be easy one would think.

Last Friday congressman Greeley, from Iowa, stated: “There are risks in doing business with the marijuana industry which should give the financial services industry little confidence that it will be protected should an institution be federally prosecuted for getting involved in illegal activities,”

Furthermore, in a letter to congress, Calvery (director of financial crimes enforcement with the treasury department said “ FinCEN wasn’t telling banks (in the February memo) they were free from prosecution simply because marijuana was legal in Colorado and Washington. Only the Department of Justice has discretion to determine whether to prosecute violations of the (Bank Secrecy Act),” she wrote.

Along with the two quotes from the congressman and treasury department, banks have come increasingly wary of the marijuana industry following a raid (https://www.thedenverchannel.com/news/local-news/marijuana/dea-firefighters-raid-vip-cannabis-marijuana-shop-in-denver ) on 4 legal dispensaries with suspected ties to Colombian money laundering.

The irony of the situation is that the vast majority of voters in Colorado (even ones that are not supporters of legal marijuana) agree that it is critical to have banking relationships to better control the enormous amounts of cash (and prevent the industry being infiltrated by less scrupulous players)

So what does this mean for marijuana banking? In a nutshell, don’t look for any dramatic changes one way or the other on the banking front. Banks will continue to not knowingly allow accounts for the marijuana industry. The only way to change this is through a federal change in the classification of marijuana as a controlled substance. Until then, the Colorado legislature is just “smokin” to think that their co-op bill has changed the landscape.

See related blog posts:

From the Colorado Real Estate Journal: is Colorado real estate “high” on marijuana https://coloradohardmoney.com/blog/2013/12/co_prices_high_marijuana/

Are the feds stoned on Marijuana banking? https://coloradohardmoney.com/blog/2014/03/are-the-feds-stoned-on-marijuana-banking/

Fairview continues to be the leader in Colorado hard money and Denver Hard money lending and is seen as an expert on marijuana lending and Banking. To learn more, please visit www.cohardmoney.com.

https://www.denverpost.com/business/ci_25732184/treasury-guidance-banks-didnt-ok-work-pot-businesses