DOJ Announcement to Repeal Protections for Legal Weed Sends Shockwaves Through Banks in Cannabis
One of the biggest issues that has plagued the legal cannabis industry since its inception is banking. Due to marijuana being illegal on the federal levels, the majority of financial institutions will not work with canna-businesses. This has forced many dispensaries to accept cash only, which can be quite dangerous – many use armored trucks to transport thousands of dollars to secret locations. Fortunately, within the last year, a small number of credit unions and banks began to allow cannabis businesses to open accounts and process debit or credit card transactions.
However, the marijuana banking sector is facing a great deal of confusion and fear due to Attorney General Jeff Sessions’ decision to rescind the Cole Memo, an Obama-era policy that offered certain protections for compliant cannabis businesses in legal states. In the weeks following, states have seen little to no response, and most things appear to be business as usual. But for the banks and credit unions working within legal states, the news isn’t good.
Financial Institutions Involved With Cannabis at a Standstill
“The withdrawal of the Cole memo really couldn’t have come at a worse time, because now is the time that the types of banks and credit unions that are willing to take on more risk would have been entering the market,” said Robert McVay, a Seattle-based cannabis law attorney, in an interview with CNBC. “If you weren’t already involved, this doesn’t seem like the right time to start,” he added.
Legal States Fire Back, Demand Protections for Marijuana Banking
Legislators from several states where cannabis is legal have spoken out against the AG’s move. This past week, 18 Attorneys General from states that have medical and/or adult-use marijuana sent a letter to the United States congress, requesting a change in federal law in order to protect banks that want to deal with marijuana businesses.
In addition to offering safe harbor for financial institutions associated with cannabis, the Attorneys General argue an exemption “could result in higher tax revenue, as it would be easier to track marijuana business income and ensure it is taxed properly.”