SEATTLE (AP) — For marijuana dispensaries around the
country, the days of doing business in cash — driving around with
bill-stuffed envelopes to pay the rent, or showing up at a state revenue
office with $20,000 in paper bags for the tax man — can’t end soon
enough.
It’s not clear that the Obama administration’s new guidance on pot-related banking is going to end them.

The
Justice and Treasury Departments on Friday issued banks a road map for
doing business with marijuana firms. The security-wary pot industry,
including recreational shops in Colorado and medical marijuana operators
elsewhere, welcomed the long-awaited news, but banking industry groups
made clear that the administration’s tone didn’t make them feel much
easier about taking pot money.
The banks were hoping the
announcement would relieve them of the threat of prosecution should they
open accounts for marijuana businesses, Don Childears, president of the
Colorado Bankers Association, said in a written statement. It doesn’t.
"After
a series of red lights, we expected this guidance to be a yellow one,"
Childears said. "At best, this amounts to ‘serve these customers at your
own risk’ and it emphasizes all of the risks. This light is red."
Some
dispensaries have managed to open accounts, sometimes by being less
than forthcoming about their business, but for the most part banking has
long been a headache for the cannabis industry. Because marijuana
remains illegal under federal law, banks haven’t been able to accept pot
business without risking prosecution for money laundering or
racketeering.
But 20 states now have medical marijuana laws on the
books; two, Washington and Colorado, have legalized marijuana sales to
adults; and Alaska voters this summer will consider a similar
recreational pot law.
With the industry emerging from the
underground, states want to track marijuana sales and collect taxes.
It’s a lot easier to do that when the businesses have bank accounts.
It’s
easier on the businesses, as well. For Seattle’s Conscious Care
Cooperative, a medical marijuana dispensary with three branches and
11,000 members, the guidance "definitely looks exciting," said Trek
Hollnagel, a business consultant there.
The dispensary started
operating on a cash basis after bouncing from bank to bank. Hollnagel
said Conscious Care was always up front with banks about their business,
and some, including Bank of America, would let them open accounts —
only to freeze or close them later on.
"From one day to the next
they changed their policies," Hollnagel said. "If all your funds are
frozen for two weeks it makes it difficult to run a business. You write a
rent check on a Monday, get a call from the bank Tuesday saying the
account’s frozen, then a call from your landlord on Wednesday saying the
check bounced."
Instead, Hollnagel or others at the dispensary
wound up driving around with $10,000 in a bank envelope to pay their
bills. And when they showed up at the state Department of Revenue to pay
their taxes, it would take half an hour for an agent to count the
money, Hollnagel said.
"Hopefully with these changes we’ll be able to go back to being a real business," he said.
Maybe, maybe not.
Under
the guidance, banks must review state license applications for
marijuana customers, request information about the business, develop an
understanding of the types of products to be sold and monitor publicly
available sources for any negative information about the business.
The
guidance provided the banks with more than 20 "red flags" that may
indicate a violation of state law. Among them: if a business receives
substantially more revenue than its local competitors, deposits more
cash than is in line with the amount of marijuana-related revenue it is
reporting for federal and state tax purposes, or experiences a surge in
activity by third parties offering goods or services such as equipment
suppliers or shipping services.
If a marijuana-related business is
seen engaging in international or interstate activity, such as the
receipt of cash deposits from locations outside the state, that’s
problematic, too.
The banks need to file "suspicious activity
reports" on their pot customers — designated either "marijuana limited,"
for those believed to be complying with the federal government’s
law-enforcement priorities, such as keeping pot away from children;
"marijuana priority," for those the banks have questions about; or
"marijuana termination," for those believed to be engaging in criminal
activity.
"They’ll have to have a real awareness of the activities
of their customers," said Denny Eliason, a lobbyist for the Washington
Bankers Association.
The American Bankers Association said banks
will only be comfortable serving marijuana businesses if federal
prohibitions on the drug are changed in law.
U.S. Rep. Denny Heck,
D-Wash., wrote on Twitter that the announcement makes it "significantly
safer to regulate and operate the voter-approved legitimate marijuana
market in our state," but agreed the only way to truly solve the problem
is to change federal law. He and Colorado Democratic Rep. Ed Perlmutter
have introduced a bill that would allow banks and credit unions to work
with marijuana businesses.
"We’re constantly facing the threat
that banks will shut us down," said Todd Mitchem of OpenVape, a Denver
company that sells electronic devices to consume marijuana. "It makes it
very difficult to do business."
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Associated Press writers Pete Yost in Washington, D.C., and Kristen Wyatt in Denver contributed to this
report.
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