The U.S. medical cannabis industry is in the midst of somewhat of a cash crisis – but it’s not the type usually experienced by businesses.
A cash flow crisis is one often associated with a lack of easily accessible funds. For the cannabis industry in the U.S., it can be quite the opposite. The problem is what to do with the cash made.
Because of the delicate legal standing of medicinal cannabis; many operators are refused checking accounts and other banking services. Some “cannabusinesses” are resorting to vaults and armed guards to protect their takings.
According to a survey conducted by Marijuana Business Daily, around 60% of companies don’t have bank accounts for their businesses.
Of the businesses that currently have an account, 29% previously had other accounts closed by a bank due to the nature of their business.
While the U.S. banking system features both federal and state-chartered banks, the federal government still retains regulatory control over state-chartered institutions.
A number of states may permit cultivation and sale of medical marijuana; but with marijuana generally illegal under federal law, institutions providing services run the risk of this association being viewed as criminal activity – potentially leading to legal action from the feds.
The Office of National Drug Policy states:
“It is important to recognize that these state marijuana laws do not change the fact that using marijuana continues to be an offense under Federal law.”
Even though the U.S. Attorney General has previously stated federal authorities will not prioritize punishing financial institutions acting as service providers to state-level marijuana industries; it’s not set in stone and therefore a backflip from the AG at any given moment is possible.
With so much confusion and conflict, it’s little wonder banks are so risk averse.
One businessman interviewed by Marijuana Daily commented that the process for acquiring a bank account had been more complex than gaining local and state licenses to operate his business.
In July, Oregon Senator Jeff Merkley proposed a bill granting financial institutions with dispensaries as clients in the state immunity from federal prosecution. That bill has been stuck in the Senate Banking, Housing and Urban Affairs committee since then. In late November, Committee Chairman Richard Shelby stated he has no plans to bring the bill up for mark-up in his committee and a workaround by Senator Merkley has also been rejected.
Aside from the situation making normal business operations quite difficult, it also places cannabis businesses in a dangerous position with having so much cash on-hand or stored off-site; particularly as knowledge of the situation spreads. Dispensaries are already being targeted, with a number of armed robberies in recent months.