Medical marijuana may have been legalized in 23 states, but dispensary owners continue to labor under an unspoken banking policy that is disadvantageous to those involved in the business. This has been the scenario ever since the first states–spearheaded by California in 1996–legalized marijuana for medical use. For dispensary owners who are working within the bounds of their individual state laws, this policy is akin to being treated as criminals for activities that have been deemed totally legal. But all this is about to change with the House of Representatives taking action.
On July 16, 2014, a vote was passed in the House effectively preventing the Treasury Department from using government funds for penalizing banks that provide financial services to dispensary owners and growers in marijuana-legal states. Supported by a bi-partisan committee, the law was passed on the strength of a 231-192 vote, and essentially gave banks the go-signal to conduct business with dispensary owners and growers.
The law also prevents the Internal Revenue Service–which is under the jurisdiction of the Treasury Department–from auditing marijuana business owners. The IRS is also barred from treating legal marijuana businesses as criminal enterprises, and forcing them to pay taxes on their gross revenue, similar to policies implemented against cartels and other criminal organizations.
Although the new law may not seem as newsworthy as other recent events in the path toward marijuana’s legalization, it is actually quite significant on several fronts. As the executive director of Law Enforcement Against Prohibition Maj. Neill Franklin said, one of the most “significant obstacles” to creating a legal marijuana market was the institution of strict banking policies. With the passage of the new law, it is therefore hoped that the medical marijuana industry would take a huge step toward widespread acceptance in society.
For those in the marijuana industry, the struggle to have access to services that all other legal businesses take for granted has been a long and hard-fought one. Because of banking restrictions against such businesses, dispensary owners have been unable to transact with customers using credit cards, and even to pay their employees with a check drawn from a bank. Marijuana business owners are also unable to deposit their earnings in a company account with local banks. These businesses are therefore forced to carry out virtually all their transactions in cash, which in addition to the inconvenience, also opens up a number of serious security risks.
The main reason for the hesitance of banks to deal with the marijuana industry is the federal government policy that continues to classify marijuana as an illegal substance. This means that businesses involved in the cultivation and sake of marijuana are basically considered criminal enterprises, even if marijuana is legal in their individual states. Because of this policy, banks have largely avoided providing services to dispensaries and nurseries, rightly fearing that such activities may open them up to the risk of federal prosecution for money laundering activities. With the new law passed in the House however, banks may finally be able to work with dispensary owners without fear of government prosecution.