It is well known that any bank which is insured by the federal government (FDIC), is forbidden from knowingly handling money that comes from any federally illegal business. Since cannabis still stands at a schedule I regulation, most banks cannot touch money that comes from the state regulated, legal marijuana industry. This makes it difficult when businesses try to handle basic tasks such as payroll, taxes, and finances.
In California, which is the countries largest market for medical marijuana and soon to be recreational marijuana, every year 14 million to 16 million tons of pot is produced. Consumption stands at between 1.5 and 2 million tons. Amongst the other two new states to recreationally legalize marijuana (Massachusetts and Nevada), California will have recreational marijuana beginning on January 1st, 2018.
Because cannabis is illegal under federal law, the sales of $5 billion alone in California can only be dealt with as cash. This leads to safety issues and issues within conducting a proper business. In addition, businesses cannot tap into the large resources of credit and debt products that regular companies have access to. With this in place, many cannabis companies suffer due to not being able to grow their businesses properly as any other company would.
One cannabis grower in Sacramento stated that customers “have to pay us in cash.” Which can lead to increasing threats of robbery and so on.
A member of the California Board of Equalization, which collects state-specific taxes and fees, Fiona Ma, stated, “I think people get a little fed up, and they want an alternative that is going to be easy, transparent and affordable. This would be a long-term solution and there needs to be a commitment from the state.”
With private banks taking over the hole in the industry, profit is now leading what should be a federally legal market.
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