Financial institutions are avoiding dealing with marijuana businesses, even in states where the drug is legal. As a result, owners of these businesses are forced to institute cash-only policies, CNN reports.
Banks and credit card companies are facing pressure from the federal government to avoid marijuana businesses, because the drug continues to be illegal under the federal Controlled Substances Act. Banks can be accused of money laundering if they work with marijuana businesses, the article notes.
States have a difficult time collecting taxes from cash-only businesses, which face security risks from having so much cash readily available.
The Northwest Patient Resource Center in Seattle, which grows and sells marijuana, was dropped by major credit card companies last year. Owner John Davis bought his own ATM machine, which he refills daily with several thousand dollars in cash. He deposits the rest of his earnings in the bank every day. “The more cash you have sitting around, the more of a target you are,” he said.
His bank notified him last fall that it would not offer him banking services, because he was a marijuana-related business. He started an unrelated holding company for banking purposes. This type of secret banking among marijuana businesses is common, CNN notes.
Daniel Williams, CEO of Canna Security, which provides alarm systems for the marijuana industry, says he is forced to deal with cash since his clients are cash-only businesses. He often deposits $10,000 in cash. Williams says having the financial industry refuse to work with marijuana-related companies “almost makes it impossible to run a proper and legitimate business.”