Disclaimer: This column is written for educational purposes only. It does not provide specific legal advice and does not create an attorney-client relationship. This column should not be used as a substitute for competent legal advice from a licensed attorney in your state.
The cannabis industry’s banking crisis has been brewing for years, but in recent months it’s been gaining more attention. In 2016, nearly $7 billion worth of marijuana and marijuana products was sold within the United States. U.S. marijuana sales are projected to rise 35 percent in 2017, with the market reaching $17 billion in annual sales by 2021. Now that recreational marijuana has been legalized in California (effective January 1, 2018), the state’s cannabis market alone has a projected value of $7 billion. Of this $7 billion, $1 billion is expected to be collected in taxes by state and local governments. However, the large majority of these profits may never be deposited into bank accounts.
So far, the industry has remained largely “unbanked.” Many of the estimated 7,000 to 11,000 legal plant-touching cannabis businesses in the U.S. operate primarily in cash, leaving owners and employees vulnerable to burglary, armed robbery and other violent crime. Major banks and credit card companies are especially wary of doing business with growers, manufacturers and dispensaries “out of fear they’ll be penalized for money laundering,” as one Los Angeles Daily News piece put it. Even the 14,000 to 22,000 legal, non-plant-touching businesses face difficulty finding consistent financial services. Unfortunately, because marijuana is still listed as a Schedule I drug in the federal Controlled Substances Act, most federally chartered banks and credit unions refuse to work with cannabis businesses.
The Obama-era Cole Memo, which is still in effect, set forth eight priorities for the federal government in enforcing marijuana-related crimes. In response to the