California marijuana lawyers have long known that one of the greatest risks when it comes to managing marijuana money is the potential to be accused of laundering it, given that it’s still illegal under federal law. Even as an increasing number of states have made the drug lawful to varying degrees, many financial institutions remain frigid about such partnerships.
There are ways to smartly navigate your finances, and the experienced legal team at the Cannabis Law Group in Los Angeles can help you establish the right plan.
Recently in Oklahoma, a top banking regulator informed lawmakers there that banking with marijuana now is more riskier than it’s ever been, despite the fact that marijuana is now legal to some degree in 30 states and available for recreational use in nine of them. The problem remains the federal government’s classification of marijuana as a Schedule I controlled substance – placing it in a category that stipulates extreme danger of addiction and no medicinal purpose.
Oklahoma media reported the banker told state lawmakers establishing marijuana policy that until Congress acts to initiate clear laws that either outright legalize it or empower the states to take on regulation themselves, financial institutions are going to be extremely wary of extending partnerships to those within the new medical marijuana industry there.
Banking institutions recognize that the U.S. government’s current classifications imposes a wide range of restrictions on the drug, which include limitations on ways businesses regulated by the state can transfer money and avoid penalty under federal drug-trafficking statutes.
This is the primary reason so many banks still decline businesses with cannabis farmers, producers and dispensaries as well as other companies that service the medical marijuana industry in that state.
California SB-930, a banking bill that would have established a state-charged banking system that would have given marijuana merchants access to the traditional financial services most other legal businesses enjoy died in August in the Assembly Appropriations Committee. Meanwhile, projected sales in this state alone are expected to hit $26 billion by 2025.
Even in Colorado, where medical marijuana has been lawful for a full decade and where recently recreational marijuana is allowed, only roughly 10 percent of financial institutions will participate. In Arkansas, where medical marijuana became legal in 2017, no bank in the whole state will accept cash from those in the industry.
In total, about 400 banks nationally offer some services (many limited) to businesses engaging in marijuana operations. That’s out of some 6,000 that are insured federally – and despite the fact that this has become a multi-billion dollar industry.
The banking executive said he’s been unable to find a means by which to get around the federal law. Some banks do accept the liability that comes with a marijuana business partnership, but for the most part, cannabis firms are often left to largely conduct business solely as cash operations.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 714-937-2050.
Bankers hesitant to work with marijuana industry, Oct. 11, 2018, OKNews
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Corporate Investment in Marijuana Follows Public Demand , Oct. 11, 2018, Los Angeles Marijuana Attorney Blog