The UpTake: Less than a dozen banks in Colorado are providing limited services to marijuana-related businesses, according to local banking officials, so pot businesses still deal mostly in cash.
I t’s been a year since Colorado made history by legalizing the nation’s first recreational marijuana stores, yet those pot shops still struggle to get bank accounts.
City, county and state officials have, for the most part, focused on policing the industry, ensuring public safety and collecting taxes and fees, but a critical problem remains: How to provide financial services to Colorado’s legal marijuana businesses.
Banks have shied away from marijuana businesses because pot is still considered a controlled substance and is illegal under federal law, and banks are prohibited from providing services to illegal businesses. And even though the Treasury Department and Justice Department have offered “guidance” to banks saying it was OK to provide some services to legal marijuana businesses, Congress still has yet to pass a law permitting it.
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So stories abound of marijuana business owners carrying bags of cash that have been sprayed with Febreze air freshener to King Soopers supermarkets to get money orders, or depositing cash in ATMs around the city so they don’t get questioned by bank officials, or stashing money in safes in their own homes.
“A lot of companies will try to open accounts under some holding company to try to skirt it, and they’re basically committing fraud because you have money laundering going on,” said Doug Friednash, former Denver city attorney and a shareholder at Brownstein Hyatt Farber Schreck. “But they’re just worried about their account getting shut down.”
Less than a dozen banks in the state are providing limited services to marijuana-related businesses, according to local banking officials, so pot businesses still deal mostly in cash. That creates public safety issues, headaches for government employees who have to deal with cash transactions, and increased costs for both business owners and the government.
The marijuana business owners contacted for this story didn’t want to talk publicly about how they deal with their finances, although many have contracted with security businesses like Lakewood-based Blue Line Protection Group to help with transporting cash and marijuana.
Blue Line also recently formed a joint venture with an unnamed Colorado bank to provide security and compliance services for marijuana businesses that would …Read More