Even state-chartered banks often rely on Federal Reserve
by Jana Weltzin
Due to the lack of traditional banking services, cannabis business owners are faced with a cash management and security disaster. Cannabis appears to be the only state-sanctioned business whose financing ability is restricted to private individual loans that are usually unsecured and subject to extremely high interest rates. What other market faces this type of service discrimination?
The consequences of such discrimination are a lose-lose for all. The state loses out on potential tax revenue as cash is more difficult to track; states will have to spend more money on police services to deter robberies; cannabis businesses are unable to utilize banking services to track money in and out; they have to expend more money on security and onsite vaults; large stockpiles of cash at the businesses puts employees at risk of being a target for criminals; and banks lose out on a substantial amount of business. Also, because the opportunities for traditional lending services are nonexistent or very limited, private individuals who do loan funds to cannabis-related companies could easily have connections to crime groups or motives that implicate the Cole Memo priorities. Therefore, the federal government is undermining its own priorities by restricting the ability of cannabis companies to do business with regulated financial institutions. Is there a solution?
Not yet, but hopefully soon.
