DISTRICT OF COLUMBIA: Although 28 states have already legalized marijuana for medicinal or recreational use, the U.S. Drug Enforcement Administration (DEA) continues to label marijuana a Schedule 1 substance, along with heroin and LSD, making it illegal on a federal level. As a result, the banking industry has been slow to provide services to marijuana businesses, forcing many of these companies to operate on a cash-only basis.
Cash transaction businesses are a tempting target for thieves, and the lack of oversight at times leads to lost tax revenue. It’s a situation that Senator Elizabeth Warren, a member of the Senate Banking Committee, is anxious to change. As the Associated Press initially reported, Warren and nine other senators have called upon the Financial Crimes Enforcement Network to issue new and stronger guidance allowing banks to provide services to marijuana shop vendors. The moves are a significant encouragement to payment processors supporting the cannabis industry, as well as other industry players.
One of the supporters is Singlepoint, Inc. (OTC: SING), a mobile technology and payments provider, which, through its “SingleSeed” Payments subsidiary, provides payment solutions for the cannabis industry. Its mobile marketing and payment solutions include cashless ATM, Pay-by-Text™ and text message marketing. The company is strongly encouraged by the efforts of Senator Warren and others on Capitol Hill, and the significant positive changes they could bring.
Previous guidance efforts by the U.S. Department of the Treasury gave banks only limited permission to work with legal marijuana businesses. Along with the DEA’s Schedule 1 listing, it has created a significant gap between state and federal treatment of marijuana. Even though the number of financial institutions willing to provide services to marijuana businesses has grown significantly in recent years, only a small percentage currently serve the industry. It’s still an area dominated by small state-chartered banks and credit unions.
Supporters however see an inevitable day, through efforts such as those now being led by Senator Warren, when large national banks like Wells Fargo offer comprehensive services to the cannabis industry, further spurring already rapid industry growth.