The transactions of the marijuana industry continue to be based on cash as federal regulation refuses banks from accepting state-legislated cannabis money. Take a classic marijuana dispensary who is forced to do all of their business in cash. Once they receive all that money, how do they pay their employees, keep their profits safe, and use money to pay anything from rent, to a car payment?
The world of banking for cannabis-based companies is constantly contradicting itself as one branch of the federal reserve can hold money, while a federally regulated bank cannot.
With the use of recreational pot to become legal after the passing of Proposition 64, the sales of cannabis are expected to top $7.5 billion by 2020. This number is up from around $3.3 billion last year.
With Proposition 64 loosening the regulations of purchasing weed, it did nothing to deal with the regulation behind where all those billions of dollars will go.
Although marijuana is legal for medical use in 29 states and recreational use in eight, the federal government still lists it as a Schedule I narcotic, in the same category as heroin and LSD, as a substance with both high risk for danger as well as no medical use.
Unlike state laws, banks cannot cannot get around federal laws. The only reason banks and credit unions can guarantee deposits is because of the FDIC (Federal Deposit Insurance), that insures your money.
Banks are required by federal law to tell authorities if their customers are suspected to be engaged in illegal activity, and because, you guessed it, marijuana is federally illegal, banks are not allowed to do business with them. No matter what the state says, banks are required to follow the laws put in place by the feds with subject to termination completely.
As medical marijuana sales continue to grow, the question remains on where the dispensaries and companies involved will put their hard earned money.