Marijuana Money Is Pot Of Trouble For Banks

COLORADO:  During a visit to the Dixie Elixirs & Edibles plant in Denver last summer, I saw the machines the company uses to produce cannabis concentrates, the kitchen where it makes marijuana-infused chocolates, and the bottling line for its THC-spiked sodas. Toward the end of the tour, I had a semi-serious question for the company’s CEO, Tripp Keber: “Where do you keep your piles of money?”

Keber laughed but quickly turned serious. “We actually have strong banking relationships,” he said. “We don’t talk about them. Asking someone about their banking is like asking them what they wear to bed at night. It’s an intensely personal question, even within the industry.” You can begin to understand why banking is such a touchy subject for the newly legal cannabusinesses in Colorado and Washington (as well as growers and dispensaries in the 21 states that allow medical but not recreational use of marijuana) if you consider the federal laws a financial institution violates when it does business with a state-licensed company like Keber’s.

“By providing [a] loan and placing the proceeds in [a] checking account, the institution would be conspiring to distribute marijuana,” writes University of Alabama law professor Julie Andersen Hill in a paper she presented at aconference on marijuana and federalism last week. “By facilitating customers’ credit card payments, the institution would be aiding and abetting the distribution of marijuana. And by knowingly accepting deposits consisting of revenue from the sale of marijuana, the institution may be acting as an accessory after the fact.”

That is not the end of the possible charges. “A financial institution that knowingly processes transactions for marijuana-related businesses commits the crime of money laundering,” Hill notes. Failure to meet the detailed monitoring and reporting requirements of the humorously named Bank Secrecy Act (BSA), which requires financial institutions to keep an eye out for suspicious activity, also can be treated as a felony.

 

Blue Line Protection Group Providing Financial, Security And Compliance To Legal Marijuana Industry

COLORADO:  Blue Line Protection Group, a leading provider of protection, financial and compliance services to the legal cannabis industry, was featured on the front page of The Denver Post on Sunday, June 15th in the article, “Reluctance of banks leaves pot shops looking for secure practices.”

The article focuses on the unique and uncertain banking issues facing legal marijuana dispensaries in Colorado. Traditional banks have not been willing to offer services to cannabis-related businesses due to the serious compliance issues they face, as it is illegal under federal law to manufacture, distribute or dispense marijuana.

The story highlights “Medicine Man,” a family-owned Denver marijuana business with designs on becoming a national brand that has employed Blue Line Protection Group’s security services since January 1st of this year. In addition to its armed guard security and compliance services, Blue Line is currently working with five Colorado marijuana companies to provide a viable financial solution for lawful cannabis dispensaries and has drawn interest from two Colorado-based banks.

The Denver Post article quoted Dan Sullivan, Blue Line Protection Group’s Vice President of Sales & Training and Andy Williams, Medicine Man’s President & CEO, describing how the two businesses are successfully working together.

Referring to Blue Line Protection Group, the article stated, “The company would serve as a compliance intermediary, an independent third party that would provide banks with data confirming that customers are 21 or older, licensing confirmation, monthly tax income, sales figures and other sensitive information.”

Mr. Sullivan commented, “The banks are saying they won’t do it because it’s an enormous amount of information they don’t possess. A third party, though, could do it for them. Blue Line would transport cash from businesses, store it in its own vault and then take it to a bank processing center.”

Andy Williams said the arrangement would give Medicine Man access to debit cards and checking and the terms were agreeable.

Sean Campbell, Blue Line’s Chief Executive Officer, commented on the article, “Blue Line has developed a proprietary standards and compliance verification program for banks interested in providing services to cannabis-related businesses. This makes Blue Line a natural fit to provide ongoing compliance services and reporting in this industry as we build upon our current suite of services to satisfy federal banking compliance requirements.”

Treasury Defends Rules On Banks, Marijuana Sellers

DISTRICT OF COLUMBIA: Treasury Secretary Jack Lew on Tuesday defended the Obama administration’s guidelines to banks conducting transactions with legal marijuana sellers as congressional Republicans questioned whether the guidance amounts to tacit federal approval of a drug illegal in most states.

The Justice and Treasury departments issued a roadmap in February that would allow the new businesses to make payroll, save money and pay taxes, a move that enables the legalized marijuana industry to operate in Colorado and Washington state. In 2012, the two states became the first to approve recreational use of marijuana.

Rep. Hal Rogers, R-Ky., chairman of the House Appropriations Committee, challenged Lew at a hearing, questioning whether guidance to banks on doing business with legal marijuana sellers represents a “rubber-stamp” by the federal government for a predominantly illegal activity.

“Without any guidance, there would be a proliferation of cash-only businesses, and that would make it impossible to see when there are actions going on that violate both federal and state law and that … would be a real concern,” Lew told the House subcommittee on financial services. “We thought that the clarity, bringing it into daylight, was a better solution.”

These 'Bitcoins For Marijuana' Try To Solve Legal Weed's Big Heist Problem

Bitcoin isn’t the only digital currency changing the way we pay for things. Two new cryptocurrencies aimed at allowing people to safely buy drugs — legal or illegal — may provide new payment alternatives to the largely cash-only industries.

Their developers promise safety and security — and they just may change the course of the drug war in the process.

PotCoin and DopeCoin won’t be the first digital currencies to follow the headline-grabbing, wildly fluctuating and unregulated Bitcoins that took the digital world by storm last year. But they’ll be the first dedicated solely to the drug marketplace, which has been largely shunned by traditional banks, even in its legal forms in some U.S. states.

Money And Marijuana: Still No Action From Feds, Washington's Heck Reports

WASHINGTON:  Washington Democratic Congressman Denny Heck today issued a statement concerning financial institutions and the business of legal marijuana.

Heck’s office reported: “It has been over a year since Washington voters approved I-502. Since that time, officials in our state have worked tirelessly to uphold the will of the voters and implement this law safely and efficiently. Soon, Washington’s regulated marijuana industry will begin operations.

“The hundreds of legitimate marijuana businesses that will open in the coming months will, however, lack one of the most basic tools small businesses need: consistent access to banking and financial services. These business owners are unable to utilize these services because of federal laws and policies which have not been updated to reflect changing state laws in Washington, Colorado and around the country. [Read more…]

Cash-Only Cannabis: Colorado Pot Shops Work Through Financial Hiccups

COLORADO:  While the sale of recreational-use marijuana is now legal in Colorado, its status as illegal under U.S. law is leading to complications for vendors, who can’t use the federal banking system to do business.

When so-called “pot shops” opened up legally in Colorado last week, one thing they couldn’t offer shoppers was the ability to pay via credit card.

Due to differences in state and federal law regarding marijuana’s legality as well as legal concerns of the banking industry, these groundbreaking businesses, which drew national attention and more than $5 million in sales in the past week, can’t use the federal banking system. Which means that they’re stuck doing business—everything from taking customer payments to paying employees—in cold, hard cash.

“There is absolutely no justifiable reason to allow this threat to public safety to continue in those states where the regulated sale of marijuana has been made legal,” Betty Aldworth, deputy director of the National Cannabis Industry Association (NCIA), said in a statement ahead of the launch of Colorado’s legal dispensaries.

 

Recreational Pot: Processors Of Credit, Debit Cards Relax Rules

COLORADO: Recreational-marijuana businesses might not be as unbanked as they claim, with dozens of stores offering patrons payment alternatives to cash — each requiring a bank account.

Whether by credit card or ATM, customers say they were pleasantly surprised to learn that the cash in their pockets wasn’t necessary to buy recreational cannabis.

“It was at the counter, like most non-marijuana retail stores,” said Rachelle Yeung, who works at the Marijuana Policy Project but didn’t know that some stores would accept her plastic.

“I did not know ahead of time but was pleasantly surprised,” she said of using her Visa card at a Lakewood store. [Read more…]

Justice Department To Clarify Bank – Marijuana Company Transaction Rules

DISTRICT OF COLUMBIA: The Justice Department is drafting legal guidance to help clarify how the banking industry can do business with newly legal marijuana businesses in states such as Colorado, according to people familiar with the matter.

The planned legal memo won’t draw clear lines about what banks can and can’t do, but will instead emphasize that prosecutors’ priorities are to go after businesses that use local, retail marijuana sales as part of a larger criminal activity, such as diverting pot to states where it is still illegal, use the proceeds of such sales to fund illegal activity, or use the pot business as cover for other illegal activity, according to a person familiar with the draft. The person cautioned the language of the document is still being revised and could take weeks or months until it is finalized. [Read more…]