Marijuana legalization in Washington and Colorado can’t succeed so long as banks are afraid to work with pot businesses. But a federal official, reports American Banker, is expected to announce a small breakthrough: 105 banks and credit unions are now working with the marijuana industry.
Banks are starting to work with marijuana dealers as legitimate businesses
Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (FinCEN), will give the speech in Washington, DC, in an attempt to allay remaining concerns that marijuana businesses can’t find legitimate banking options as a result of federal prohibition.* Without the ability to store their money safely, pot shops, growers, and processors say they’re forced to carry thousands in cash and, as a result, more vulnerable to thieves.
The Obama administration filed a guidance in February assuring financial institutions that they will not be prosecuted under federal law if they work with state-legal marijuana businesses — as long as they meet certain guidelines. But the guidelines were so stringent that many banks and marijuana businesses, particularly in Colorado and Washington, argued most financial institutions would stay away.
The speech appears to confirm some of the concerns. The 105 financial institutions working with marijuana businesses make up less than 1 percent of all banks and credit unions in the country, according to American Banker. They’re also spread across the 23 states that allow medical marijuana and two states that allow the drug for personal use.
Banks also appear to be ending nearly as many working relationships with marijuana businesses as they’re creating. The speech will indicate that financial institutions filed 475 notices to FinCEN about terminating relationships with marijuana businesses. That’s nearly as many as the 502 notices indicating a bank or credit union is working with a pot shop, grower, or processor.
In response to the banking concerns and the public safety issues surrounding them, some federal officials want to make it easier for banks and credit unions to work with marijuana businesses. In July, the House of Representatives approved a bill that would prohibit the US Department of Treasury from using any federal funds to penalize financial institutions that serve marijuana businesses operating legally under state law. The bill needs to pass the Senate and get President Barack Obama’s signature to become law.
To learn more about marijuana legalization, read Vox’s full explainer and watch the video below:
*Correction: The original version of this article said the speech is taking place in Washington state. It’s actually taking place in Washington, DC.
