Even though 23 states and the District of Columbia have legalized medical and recreational marijuana, the legal pot industry faces a mountain of issues. The biggest one right now is that the industry is a cash-only business. All purchases and sales related to marijuana have to be made with cold, hard cash. The majority of this problem stems from the fact that the federal government still classifies marijuana as an illegal substance, so banks that took money from marijuana stores run a large risk of being shut down by the Department of Justice.
The Obama Administration attempted to curb this issue by giving the Treasury and Department of Justice new guidelines on how to deal with money from state-approved marijuana stores. These federal statements basically told both departments not to go after and seize such funds. Unfortunately for the pot industry, even this hasn’t encouraged banks to accept legal pot money because most banks are still wary of federal government intrusion.
Being locked in a cash-only medium hurts legal pot sellers on every level. Storeowners have to worry about theft and robbery, since their money is very vulnerable. Since all sales are made in cash, them and their employees have lots of it on hand, making them easy targets for robbers, posing a serious danger to the people of the industry. Large amounts of cash then need to be transported from the stores to banks. Only about 105 banks nationwide have agreed to take pot money. Marijuana sellers have been forced to hire armored truck or other armed services to take, literally, tens of thousands of dollars at a time to deposit them.
The House of Representatives passed two bills which would have helped end this cash problem. The first prohibited the DEA from interfering with state cannabis laws. The second bill stopped the Treasury from penalizing banks that took legal marijuana business money. However, since the bills are amendments on a larger, partisan bill, it is unlikely to survive the Senate.
In Colorado, a solution may be underway to solve this problem. The Colorado state government issued a charter to the Fourth Corner Credit Union to be the first financial institution to serve the legal marijuana industry. Fourth Corner is already operating with Colorado’s permission, but it needs a master account with the Federal Reserve and insurance from the National Credit Union Administration to be legitimate. Fourth Corner is waiting for approval from the federal government: the decision will decide whether Fourth Corner and similar credit unions may or may not be a thing in the future. The marijuana industry will, for the time being, have to stay a cash-only industry.