Commercial marijuana is spreading as states throughout the country adopt more permissive marijuana policies. This trend started on the West Coast with California, Oregon, Washington and Alaskaand moved east to Colorado. Currently, a total of 25 states allow some form of legal marijuana. Though Ohio just defeated a controversial initiative that had opposition within the marijuana community, Montana and Nevada will have expanded marijuana access on the ballot in 2016.
Yet banks face a growing discrepancy in serving marijuana businesses. Some bank regulators are trying to cut off access to the payment system for banks that have marijuana businesses as customers, while others are allowing it. That means bank regulators affect whether marijuana can be a viable commercial business.
— CNBC (@CNBC) November 8, 2015
Access to the banking system is critical for a business. To accept credit and debit cards, the business needs a relationship with a bank or payment processing company that ultimately uses a bank. Without such access, the business must pay employees, purchase equipment, and pay taxes all in cash. This means that many marijuana business owners must personally drive tens and sometimes hundreds of thousands of dollars in cash to state capitals to pay their taxes, which is unwieldy and dangerous.
As state and federal law diverges on marijuana policy, banks are caught in the middle. Federal law does not prevent banks from processing marijuana related transactions or having marijuana businesses as customers. However, because selling marijuana is illegal under federal law, all commercial marijuana transactions necessitate certain reporting requirements like suspicious activity reports, which are expensive and one reason many banks have opted to stay away from accepting those businesses as customers.