Banking Questions Remain

Cannabis sample and a stack of  US money
Banking guidance issued by the federal government has left the cannabis industry with less than it had hoped. Many mainstream financial institutions say they need to see a change to marijuana’s federal classification under the Controlled Substances Act before they will be comfortable with the industry.

In the days following the joint policy memos, major U.S. institutions continue to refuse to work with the industry. A spokeswoman from Wells Fargo said the bank will continue to ban cannabis businesses because, based on federal law, “the sale and use of marijuana is still illegal.”

The American Banking Association released a similar statement saying banks that work with cannabis businesses can still face “prosecution and assorted sanctions” and the organization released a Q&A-type document detailing its objections.

The Colorado Bankers Association went even further, saying that the memorandum of guidance in fact spells out why banks should not work with cannabis businesses!

However, things will change. There is too much money involved and too much state tax revenue involved.

Michael Rupkalvis, president of the payment processing company The Transaction Group, believes the industry will see traditional swipe-card accounts being offered to businesses before the end of the year. “Believe me, card processors want to work with this industry,” he said. “Most of these businesses do great revenue with very few dispute/charge back problems.”

About Douglas Slain

Doug received a JD from Stanford Law School, a MA from the University of Chicago, and a BA from DePauw University (Phi Beta Kappa). After practicing real estate and finance law at then Pillsbury, Madison & Sutro, he founded four national monthly law reporting titles now owned by Thomson-Reuters. He served two consecutive terms as chairman of the American Bar Association’s General Practice section’s Professional Responsibility Committee. Slain was an ABA-appointed rule of law consultant to the Ministry of Economy for the Republic of Latvia as its secured transactions adviser. He taught briefly at Stanford Law School as an adjunct clinical law professor. Slain has been the managing partner of Private Placement Advisors since August 2009. In January 2013 he founded Outliers Network.

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