A financial institution located in Las Vegas had the intentions to offer accounts to medical marijuana businesses has now had a change of mind, citing the high cost of complying with federal regulations.
The choice made by the First Security Bank of Nevada is leaving some in the medical marijuana business scrambling for a location to put their earrings just a they get prepared to open up shop. Most financial institutions, including the nation’s biggest bank, won’t open accounts for cannabis enterprises because the drug is still illegal under federal law.
“It’s very unfortunate,” stated Jason Awad, First Security’s chairman and CEO.
Remember, his behavior when he started breaking the news to clients, he stated “The disappointing part of it is we know most of these people. They have been in the community for years, and we know they run legitimate businesses and they’re good community leaders.”
President of the Las Vegas Medical Marijuana Association, John Laub stated banking is a crucial issue for the legal marijuana industry. Not having the proper access would force businesses to deal only in cash, promoting fraud and inviting suspicion on an industry that needs pubic trust.
“We want transparency,” Laub stated. “We think banking will make this industry a lot cleaner. It helps with the controls — cash is always a problem.”
No matter how the current banking situations might be, cannabis will always be a high volume cash industry: Credit card companies won’t process the sale if the card is used at a marijuana shop. However Laub stated, “It’d be wonderful if we could pay our taxes with checks and our employees with payroll checks.”
First National Bank will keep handling real estate loans for cannabis businesses and will leave open the companies”holdings” accounts, which store revenue is not stemming from cannabis sales. Yet Awad stated the bank will not provide “operational” accounts for depositing proceeds.
Though, medicinal cannabis is legal in the state of Nevada and an increasing amount of other states, it is putting financial institutions which are federally regulated in a touchy legal position.
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