Report: More Banks Providing Services To Cannabis-Specific Businesses

DISTRICT OF COLUMBIA: A growing number of banks and credit unions are providing financial services to marijuana-related businesses, according to data released by FinCEN (the US Treasury Department’s Financial Crimes Enforcement Network) and first publicized by the news portal MarijuanaMoment.net.

The report acknowledged that the number of financial institutions actively banking with marijuana-related businesses rose from 401 in October 2017 to 486 in September 2018.

Although the federal classification of cannabis as a schedule I prohibited substance discourages banks from cooperating with state-licensed cannabis businesses, a 2014 US Treasury Department memo provided guidance to financial institutions wishing to transact with the marijuana industry. However, that memo was rescinded by the Justice Department earlier this year.


For more information, contact Justin Strekal, NORML Political Director, at (202) 483-5500.

 

GreenMed Launches Cryptocurrency-Based Credit Card Processing App For Legal Marijuana Industry

CALIFORNIA: Pro-cannabis cryptocurrency startup GreenMed has become the world’s first one-stop shop for electronic payments in the legal marijuana industry. The platform enables customers to pay for legal marijuana with credit and debit cards. Apart from allowing card payment at dispensaries, the platform also allows users to pre-purchase for quick pick-up over its app.

GreenMed is the first platform to implement an ERC20 Ethereum token-backed application for the convenience of both customers and legal marijuana dispensary operators. The platform uses cutting-edge electronic payment processing technology in conjunction with Ethereum blockchain to execute credit card transactions.

Due to strict federal regulations, banks have been unable to partner with legal marijuana dispensaries, leaving cryptocurrencies like Ethereum as one of the only options to help the $5 billion industry accept mainstream electronic payments like credit/debit cards and electronic fund transfers. They can also choose to pay with digital currencies.

While the GreenMed application allows patients to pay for their legal marijuana with credit cards and cryptocurrencies, merchants can be issued GreenMed debit cards which enable them to withdraw accumulated funds directly from any ATM. The GreenMed debit cards can also be used at PoS and online payment gateways to make purchases, just like any other debit card.

In addition to convenience, GreenMed also provides a secure option for legal marijuana dispensaries to handle their earnings. In the absence of such a solution, the dispensaries are forced to conduct all transactions in cash which not only increases the risk of theft but also cuts into the margins due to high operational costs involved in securing and transporting cash.

Largest U.S. Banks Host Accounts for Marijuana Businesses, Says American Banker

FLORIDA: A recent study commissioned by industry journal American Banker reveals that the nation’s four largest banks have opened accounts for pot shops and marijuana-related businesses. Conducted by MRB Monitor, a firm that helps financial institutions identify the risks associated with the marijuana industry, the study examined public records in the state of Massachusetts and found that 34 percent of businesses that filed to operate medical marijuana dispensaries in Massachusetts between June 2015 and September 2016 had one or more accounts at Bank of America, Citigroup, Wells Fargo, or JPMorgan Chase.

If a similar pattern of working with the marijuana industry takes hold in Washington D.C. and the U.S. states that have legalized marijuana, the prospect of financial services for cannabis outfits may not be as dire as it at first appears.

Bank of America seems to have been the most accommodating. Over half of the marijuana businesses included in the survey had accounts at the bank, though it previously told the Statesman Journal that, “As a federally regulated financial institution, we abide by federal law and do not bank marijuana-related businesses.”

Guidelines issued by federal authorities in 2014 appeared to have offered financial institutions a legal avenue to provide their services to marijuana-related businesses (MRBs). Back then, the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury Department, provided guidance[3] it said was meant to enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses.

Yet, under the Controlled Substances Act (CSA), it is illegal to manufacture, distribute, or dispense marijuana, and marijuana – like heroin, LSD and ecstasy – remains a Schedule 1 substance under the statute.

In December 2016, U.S. Senator Elizabeth Warren, D-Mass, a member of the Senate Banking Committee, along with nine other senators sent a letter to FinCEN requesting guidance on how banking services might be offered to ‘indirect businesses’ that provide services to the state-sanctioned marijuana industry.

Hopefully, after nomination season comes to a close, a response to that letter will be forthcoming; there’s a lot at stake. As ArcView Market Research wrote, “Cannabis is arguably the fastest growing industry in the world. Regulated marijuana sales in North America totaled $6.9 billion in 2016, a 30 percent increase from 2015. Sales are projected to increase to $21.6 billion by the year 2021 representing a 26 percent compound annual growth rate.”

Mounting Support for Marijuana Banking Has Widespread Implications

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.

Got Bank? Election Could Ereate Flood Of Marijuana Cash With No Place To Go

By Lisa Lambert

Although the sale of marijuana is a federal crime, the number of U.S. banks working with pot businesses, now sanctioned in many states, is growing, up 45 percent in the last year alone.

Still, marijuana merchants say there are not nearly enough banks willing to take their cash. So many dispensaries resort to stashing cash in storage units, back offices and armored vans.

Proponents believe the Nov. 8 election could tip the balance in favor of liberalizing federal marijuana laws, a move seen as key to getting risk-averse banks off the sidelines.

Measures on ballots in California, Florida and seven other states would bring to 34 the number of states sanctioning pot for medical or recreational use, or both. That could push annual sales, by one estimate, to $23 billion.

The prospect for a market of such scale is adding urgency to calls for a national approach to marijuana that expands banking options. Law enforcement and Federal Reserve officials have expressed concern about the fraud and crime associated with un-bankable cash.

Nearly 600 dispensary robberies have been reported in Denver since recreational pot was legalized in Colorado three years ago.

“There’s not a single human being who thinks there is any benefit at all in forcing marijuana business to be conducted on an all-cash basis,” said Rep. Earl Blumenauer, a Democrat from Oregon who has called for the decriminalization of marijuana since coming to Congress in 1996.

 

Banking On The Marijuana Industry?

OREGON: It is legal to sell marijuana in 23 states. But pot businesses can’t deposit their money in banks because of federal banking laws. While the dilemma has been a back-burner issue in Congress for several years, a solution may be in the works.

A provision in the upcoming financial services spending bill would prevent the federal government from spending money on penalizing financial institutions that accept legal marijuana businesses as clients. That would greatly reduce the ability of federal agencies’ to prosecute the banks.

Increased access to banking would, in turn, decrease the currently cash-only businesses’ risk of robbery by allowing customers to pay with debit and credit cards, reduce the likelihood that the business could be used as a money-laundering front and solve the nightmare of trying to pay taxes with cash

“Forcing businessmen and businesswomen who are operating legally under Oregon state law to shuttle around gym bags full of cash is an invitation to crime and malfeasance,” said Sen. Jeff Merkley, D-Ore. “It’s time to let banks serve these legal businesses without fearing devastating reprisals from the federal government.”

Bridging The Gap Between Dispensaries And Banks

OREGON: In the first week of recreational pot sales, Oregon dispensaries raked in $11 million.

But the multi-million dollar question remains: Where should people in the industry be putting their money?

Because marijuana is illegal federally, most banks won’t take the money.

“We’ve been repeatedly turned down because our company is cannabis based,” said Dan of.

Last year the Justice Department gave the go-ahead to banks to do business with the industry. But many feel there’s still too much risk, leaving business owners to keep the cash in their shops or homes, and opening them up to criminals.

 

Bipartisan Marijuana Banking Bill Introduced In The Senate

DISTRICT OF COLUMBIA: Reflecting growing public support for changing the nation’s drug laws, a bipartisan group of senators on Thursday introduced the chamber’s first bill that would legalize banking for recreational marijuana companies.

Introduced by the Senate delegations from Oregon and Colorado, two of the first states to legalize recreational marijuana, the bill would prohibit the federal government from penalizing banks that work with marijuana businesses.

Though four states and the District of Columbia have legalized marijuana, the drug is still illegal under federal law. That makes it difficult for businesses operating in those legalized states to access financial services through the banking industry. Instead, those companies have to run all-cash operations that the senators say invites crime.

Colorado Pot Credit Union Could Be Open By Jan. 1 Under State Charter

COLORADO:  The world’s first financial institution established specifically for the marijuana industry could be open in Colorado by Jan. 1.

The Colorado Division of Financial Services late Wednesday issued Fourth Corner Credit Union an unconditional charter to operate, the first state credit-union charter issued in nearly a decade.

The next hurdles will be obtaining insurance from the National Credit Union Administration, the federal regulator of credit unions, and getting a master account from the Federal Reserve System.

Gov. John Hickenlooper‘s office called the charter “the end of the line” for the state’s efforts to solve the marijuana industry’s nagging problem: obtaining banking services.

Although the NCUA insurance is not guaranteed — sale and consumption of marijuana remain illegal under federal law — Fourth Corner can operate until NCUA makes its decision.

 

Big U.S. Banks Seek New Clarity On Risks Of Marijuana-Linked Accounts

MISSOURI: Major banks are getting increasingly wary of some transactions with smaller banks that have begun to allow marijuana businesses to open accounts. Officials at the bigger institutions say they fear being in breach of anti-money laundering laws and are pressing federal authorities to make it clear what is legitimate and what is illegal.

The problem arises because in Colorado and Washington states, marijuana for general use is legal, and in a host of other states it is legal for certain medicinal purposes. But the business is still illegal under federal law, and U.S. banks are required to report transactions that they suspect involve money earned through illegal activities.

The bankers, including anti-money laundering officials at three of the biggest U.S. banks, expressed concern that their firms could face civil and even criminal penalties not only for dealing with any of the businesses directly but also handling money from the estimated dozens of small and mid-sized banks that have begun working with the marijuana shops or their suppliers.

The bankers say the U.S. Treasury Department’s anti-money laundering unit needs to clarify its expectations for the handling and reporting of wire transfers and other payments that involve people and entities linked to state-sanctioned marijuana businesses.