Legalization of Marijuana May Affect Banking Laws

In 2012 the voters of both Washington and Colorado voted to legalize the recreational use of marijuana. California has allowed the use of marijuana for medicinal purposes since 1996 and 19 other states and the District of Colombia have enacted similar laws.

However, because the possession of marijuana remains a federal crime, financial institutions refuse to let marijuana related businesses open accounts because of the possibility that they could be at risk for drug racketeering charges. This, in turn, requires marijuana businesses, including those that are considered “legitimate” by the state, to operate on a cash only basis.

In Humboldt County, as a result of those constraints, it has been a prescription for tax evasion and violence. There have been numerous strong-arm thefts in Humboldt County to steal the cash held by marijuana growers and it has been the major impetus for murders in the County.

Recently, however, there has been some light at the end of this tunnel. A September 10, 2013 article by the Denver Business Journal indicates that the government is presently in talks with bank regulators to see whether or not financial institutions in states that have approved recreational marijuana use can do business with the marijuana producers and the dispensaries. A recent AP news article indicated that U.S. Deputy Attorney General, Jones Cole, told Congress recently that the government recognized the need to deal with the absence of banking services for the blossoming marijuana industry and that they were, “trying to find the best of the imperfect solutions before us.”

Hopefully, there can be a solution to this so the producers in Humboldt County can do away with “coffee can banking” and can finally move that money into banks and avoid the fear of the midnight hold up.