Banks Deny Accounts to Marijuana Dispensary Owners
In Colorado, it has been really hard for dispensary owners to get and keep a bank account. They don't want the business, fearing the tension between between state and federal law with federal law declaring all marijuana is illegal.
Wells Fargo was about the only one to buck the trend. According to the Denver Post, that's now changing. While it stopped accepting new accounts a while ago, this week it sent out letters to existing customers with dispensary businesses saying they needed to find another bank as it would be closing their accounts as well.
"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.
Unless something is done, this will force the dispensaries to operate cash-only businesses, which is what states like Colorado, which have spent months drafting regulations for the businesses, are trying to avoid.[More...]
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.
If dispensaries are considered legitimate enough by the state that they are required to obtain business and sales tax licenses and pay taxes, why aren't they legitimate enough to have a bank account?
It seems to me that if a bank's customer can show proof of a sales tax license number and federal tax employer number, that should be sufficient. If it also shows proof of paying withholding, unemployment taxes, etc., that should be definitive.
Most banks have a little booklet with rules for opening accounts that states they can refuse to open an account for any reason. Nor do they have to provide a reason when they deny someone an account.
The feds need to get moving on passing one of the bills that have been introduced the past several legislative sessions that clearly exempts state-authorized marijuana businesses from criminal liability.
For example, H.R. 3939, the Truth in Trials Act, introduced in October, 2009 by Rep. Sam Farr, was referred to the House Energy and Commerce Committee where it's seen no action. It would amend 18 U.S.C. Section 3436 to provide an affirmative defense for the medical use of marijuana in accordance with the laws of the various States.
Someone needs to get these bills moving, or the dispensaries will be forced to become cash-only, which will make it harder for states to judge compliance with tax obligations. The tax revenue is sorely needed. At a minimum, the feds need to issue new banking regulations specifically exempting such businesses or require banks to show a legitimate reason for rejecting accounts.
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