• 23
  • August
    2010

Efforts by the state of Colorado to legitimize and lend greater transparency to the medical marijuana industry have encountered a significant obstacle: Banks across the state are refusing to conduct any sort of business with medical marijuana dispensaries/centers.

According to dispensary owners, banks are declining to conduct any type of business with them, from extending loans to opening new accounts.

In fact, Wells Fargo & Co. recently announced that it was no longer handling the accounts of medical marijuana dispensary owners, giving them until October 4 to close them out. While the banking giant had stopped opening new accounts for dispensary owners several months ago, it had still allowed all pre-existing account holders to remain with the bank.

According to Wells Fargo spokesperson Cristie Drumm, "[The decision] was based really on the complex and inconsistent legal environment across the country related to medical marijuana dispensaries."

Most banks are reluctant to conduct business with dispensary owners due to the simple fact that marijuana is illegal under federal law and banks are prohibited from working with any type of business that deals in illegal/illicit goods.

According to Tim Powers, spokesperson for the Colorado Bankers Association, "Banks are caught between the conflicting state and federal laws. One is saying the action is legal, the other is saying it's not."

State legislators are undoubtedly growing concerned with the hesitancy of banks to conduct business with the medical marijuana industry. The underlying fear is that the inability to secure legitimate banking services will cause many (if not all) dispensaries to adopt a cash-only model. This would frustrate legislative efforts to regulate accounting practices and create greater transparency in the medical marijuana industry.  

Until federal regulators provide further clarification, it seems likely that banks will continue their stance. Stay tuned for further developments ...

Related Resources:

• Pot Dispensaries Feeling Burned by Banks' Reluctance to Work with Them (Denver post)