Banks Spurn Business From Medical Marijuana Dispensaries

[Michael Komorn]

Banks spurn business from medical marijuana dispensaries

State officials fear cash-only businesses will be harder to monitor, regulate

By John Ingold The Denver Post

Posted: 08/07/2010 11:16:17 PM MDT

 

 

 

The continued reluctance of banks to work with medical-marijuana dispensaries could complicate the state's brand-new efforts to regulate the businesses.

Dispensary owners say there are virtually no banks willing to take their business. Wells Fargo & Co., which stopped accepting new dispensary accounts months ago but continued to have a number of pre-existing dispensary accounts, last week began sending out letters to those dispensary owners telling them they have until Oct. 4 to close their accounts.

"It's based really on the complex and inconsistent legal environment across the country related to medical-marijuana dispensaries," said Wells Fargo spokeswoman Cristie Drumm.

Evan Anderson, the owner of 14er Holistics in Boulder, said his banker at Wells Fargo told him Wednesday he would have to close his account.

"They were the only bank that I know any of my colleagues were using," Anderson said of Wells Fargo.

Anderson hasn't been able to find a new bank, and he said he's heard stories of fellow dispensary owners going to more than 100 banks trying unsuccessfully to find one to work with. Without a bank account, Anderson said his dispensary may have to operate as cash-only.

"They're forcing us into illegitimacy," he said.

That is exactly what state officials fear.

State Sen. Chris Romer, a Denver Democrat who sponsored the new dispensary rules at the legislature this year, said if dispensaries have to conduct all their transactions in cash it will make it harder to track their activity. That, Romer feared, could undermine new regulations requiring detailed accounting by dispensaries in the hopes of bringing more transparency to the industry.

"It would be bad for our compliance regime if they had to do 100 percent cash," Romer said.

The banks' squeamishness over dispensary accounts comes down to this: All marijuana is illegal under federal law, and it is a no-no for banks to work with illegal businesses.

"Banks are caught between the conflicting state and federal laws," said Tim Powers, a spokesman for the Colorado Bankers Association. "One is saying the action is legal, the other is saying it's not."

Powers said the bankers association plans to ask federal regulators for clarification.

Banking headaches are not new to dispensary owners. A handful of marijuana activists held noisy protests outside several downtown Denver banks last week to decry the problem.

Ed Kieta, the owner of the Alternative Wellness Center in Denver, said he has gone through three banks in the eight months his dispensary has been open. One closed his account right after Kieta wrote a sizable check for local licensing fees, sending Kieta scrambling to make sure the bounced check didn't derail his application.

Kieta said forcing dispensaries to operate as cash-only makes them more of a target for crime, and he's frustrated that his business is considered legitimate enough to pay taxes but not enough to have a bank account.

"We're at the point where we're going to have to start putting money in mattresses," Kieta said, exasperated. "It's just been crazy."

 

 

Read more: Banks spurn business from medical marijuana dispensaries - Boulder Daily Camera http://www.dailycamera.com/boulder-county-news/ci_15707659#ixzz0w04hOTcN

DailyCamera.com

 

Michael A. Komorn

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[dutch&Dutchess]

yet more proof we need to vote out the people who are getting in the way

Better get to work on this issue soon at the Fed level or they will be even further behind

[+420Atheist]

What this says to me is the banks are not making much money off the dispensaries. If these dispensaries had huge loans they were paying huge interest rates on there would be no problem. However because they just use the banks for check writing and to store the money between paydays there is no money to be made by the banks. Remember to banks money in savings is a liability and money out on loan is a asset. That is why banks don't push savings accounts anymore much to the determent of their clients. I can see a place for a new credit union that charges a high check fee to become the Marijuana Community Credit Union.