Thanks to a February 2014 guidance from the Financial Crimes Enforcement Network (FinCEN), one of the U.S. Treasury’s anti-money laundering agencies, marijuana businesses do have some access to the banking system. The guidance sets out how financial institutions can offer services to the industry without falling foul of their obligations under the Bank Secrecy Act, the legislation that forms the bedrock of the U.S.’s anti-money laundering regime. Various key priorities are laid down for institutions handling marijuana money, including ensuring that the drug is not sold to minors and preventing legal sales being used as a cover for the trafficking of illegal drugs or other illegal activity.
In Colorado about a dozen banks now offer services to marijuana firms, although Amanda Averch of the CBA says that they “have been advised not to grow that [element of their] business” and to prevent individual accounts expanding significantly. “The majority pre-existed recreational marijuana and are part of the medicinal marijuana business,” she added.
Generally larger banks which do business in several states have stayed away from marijuana, while smaller institutions and credit unions have been more willing to take the risk.
“Small banks and small credit unions participate because it has a real effect on their bottom line, and they put their faith in those Federal announcements,” said Robert McVay, a lawyer at Seattle-based firm Travis Bricken.
Even so it is clear that there are limits. Fourth Corner, a marijuana focused credit union in Denver, has been struggling to get a banking license since 2014. Participants say that marijuana money is officially tolerated only as a minority asset within a much larger business.
Joseph Sewell of Cannabis City is more optimistic. He says that during the two years that cannabis has been legal in Washington there has been a noticeable loosening in restrictions, and that firms can now rely on credit unions.
“The problem with the bank accounts, as far as our industry is concerned in Washington State, is that if you go to one of these banks, you will find that it is quite intensive and expensive,” he said, describing paying $1,500 to have his business investigated by a bank which also required an initial deposit of $7,000 cash.
“[But] more credit unions have gotten involved, so it has become a little more competitive. We can use those. We can write cheques. We can use debit services, though we can’t use Visa transactions. If you come in and buy $27 worth of product from me, I will ring it out as a $30 withdrawal from a debit card and give you $3 change.”
During the first six months of recreational marijuana legalisation in Washington, from January to July 2014, retailers and banks struggled with a lack of clarity. But after that, things slowly began to settle. Cannabis City was licensed in April and bank support was available three months later.
“Around 18 banks and credit unions are all serving the space in some capacity. That number will continue to grow,” said Lance Ott, who runs marijuana-focused consultancy Guardian Data Systems. He added that he had attended board meetings where such unions had consulted by phone with the Federal Deposit Insurance Corporation and been told that they were not at risk, as long as they complied with FinCEN guidelines. “They said your constituents have voted to legalize cannabis in the state of Oregon and you are a community bank so in the agent’s opinion the bank has a responsibility to serve its local community.”
Panayi, in Colorado, says that improvements have not yet reached her: the $22,000 banks there charge for cannabis-linked accounts are more than enough to hire an extra worker.