Why banks shun the cannabis business
In 23 of 50 US states, marijuana is partially or completely legalized, the billion dollar business grows. The contractors, however, are discriminated against because banks refuse to cooperate.
The legal marijuana industry in the US is booming – not only in Denver, where Marijuana dispensaries are outnumbering Starbucks stores. 23 US states have been selling legal or medically legalized pot. Although the business is booming, there are money problems. Not that there isn’t enough, on the contrary: Many companies have more money than they would like in cash, because banks make it extremely difficult to open bank accounts for dispensaries.
If you think about it bank transfers and card payments are crucial for small start-up businesses that have massive client basis. The problem is that federal law still classifies marijuana as an illegal drug and therefore banks shy away from any dealings with the state legality.
The Fourth Corner Credit Union from Denver joined the fight at the end of 2014 with the support of the State of Colorado to offer the industry a much needed financial boost. However, the company quickly ran into a wall, the US Federal Reserve in Kansas City called Master Account refused the authorization to the payment system of the Fed.
The Fourth Corner Credit Union did not accept the rejection. It sued the Federal Reserve and the body responsible for admission to banking authority NCUA. “The more money we can redirect into legitimate areas such as tax revenue from illegal transactions, the more we can help to change our communities for the better,” said Mark Mason, the lawyer for the Fourth Corner Credit Union. But as long as there is no definite federal marijuana legalization, the Fed is in a state of perplexity.
Shops are required to hoard cash
For approved marijuana sellers in Colorado like the “Medicine Man” are starting to hoard cash, which is dangerous and inconvenient. Employees and suppliers must always be paid in cash and because of the danger of raids, costly security services are necessary.