In a once-empty office in Oregon’s Department of Revenue headquarters, officials have created a mini-fortress. Recently hired workers to sit behind bulletproof glass at a window inaccessible to the public. Police officers brought out of retirement roam the building with handguns on their hips. Security cameras monitor the hallways.

The changes, paid for with a $3.5 million budget and prompted by the state’s newly legal marijuana industry, are similar to those that Colorado and Washington made for accepting huge cash payments of pot taxes from businesses historically blocked from banking. Federal data show that the number of banks and credit unions across the country willing to handle pot money under Treasury Department guidelines issued two years ago has jumped from 51 in March 2014 to 301 last month. More than three years into Washington’s legal pot experiment, a large majority of businesses are paying taxes electronically, a sign of better access to bank accounts. The state is even poised to require electronic payments unless the shops can show a good reason to pay in cash.

“People don’t call me anymore and say, ‘I’m opening a new business and I can’t find a bank account,’,” said Robert McVay, a Seattle marijuana business attorney.

Marijuana’s prohibition under federal law still presents a serious hurdle for pot-related businesses, which generally can’t accept credit or debit cards due to card companies’ fears about liability for money laundering or other offenses. Many legal pot shops in Washington, Colorado, and Oregon – the only states with legal recreational sales so far – and dispensaries in medical marijuana states keep ATMs on site to facilitate cash transactions. Most banking access has been through local credit unions, which limits options for the businesses.

Two years ago, the Treasury Department gave banks permission to do business with legal marijuana entities with conditions, including trying to make sure the customers are complying with regulations.
Under the guidance, banks must review state license applications for marijuana customers, request information about the business, develop an understanding of the types of products to be sold and monitor publicly available sources for any negative information about the business. With that in mind, Washington officials began posting the sales activity of licensed marijuana growers, sellers and processers online – along with any warnings or fines issued to businesses caught out of compliance.

The idea was to make it easier for banks or credit unions to discover red flags that might indicate illegal activity; such information is not posted online in Oregon or Colorado, where state officials refused to provide a breakdown of how many pot businesses pay their taxes in cash. Only two credit unions serviced Washington’s legal marijuana industry early on – Seattle-based Salal and Spokane-based Numerica – but now several others have followed suit, and even big banks seem more tolerant of pot-related accounts, McVay said.

Last December, only 10 percent of sales and business tax payments from pot firms were in cash. Three-quarters of businesses paying special pot taxes to Washington’s Liquor and Cannabis Board in the first two months of 2016 did so electronically or by check, according to the state. Oregon has collected $6.84 million from the pot tax’s first two months this year – exceeding expectations for the entire year – and more than half of the state’s pot dealers paid that in cash.

Of the $15 million-plus Washington collected from marijuana sales in February, roughly a quarter, or nearly $4 million, was cash carried through the lobby of the liquor board’s headquarters in Olympia.
Oregon isn’t set up yet to accept electronic payments, and the Department of Revenue is even planning to build out a bigger, permanent site on its main floor to accept larger volumes of pot cash.
The marijuana industry remains eager for a federal solution to their banking problem, and many hope that if California legalizes the recreational use of marijuana this November it might put enough pressure on Congress to change laws.

“Some sanity has to be brought into this banking issue,” said Beau Whitney, an industry economist in Portland who handles government affairs for a local dispensary.

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