U.S. Attorney General Eric Holder said yesterday that the U.S. Treasury and Department of Justice will allow legal marijuana sellers to conduct business with banks and credit unions. The DOJ will provide operating guidelines to marijuana businesses and banks similar to those provided to Colorado and Washington.
Banks will now be able to deposit and withdraw money in and out of bank accounts, obtain loans, build credit, and accept debit and credit cards payments.
Banks did deny opening their doors to legal marijuana businesses for fear of being an accessory to perceived illegal activities such as money laundering. Having the DOJ’s blessing for such a relationship, banks can now rest assured that they can hold legal marijuana money without fear of law enforcement interaction. Holder said that barring legal marijuana business from financial institutions causes the pot sellers grave problems.
Operating on cash-only basis creates issues for legal marijuana sellers. Marijuana businesses usually have large amounts of cash on-hand and fear that they are prime targets for robberies, forcing them to spend lots of money on tighter security. Businesses also have a difficult time claiming their money for federal tax purposes.In order to have their money accounted for, owners must deliver thousands in hard currency to revenue offices.
Holder said allowing legal marijuana businesses banking access would curtail any such problems. It has certainly become an accounting headache for legal marijuana business. He also noted that such issues cause concern for law enforcement.
“There’s a public safety component to this,” Holder said. “Huge amounts of cash – substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited – is something that would worry me just from a law enforcement perspective.”
Legal marijuana is still a budding industry, but it is appearing to be a quite prosperous one. Legal marijuana proprietors in Colorado have enjoyed booming business. In legal marijuana’s first week, sales in Colorado exceeded $5 million, and the state is expected to earn $70 million in tax revenue from legal marijuana this year.
Washington state marijuana businesses will begin operations later this year with other states, mainly on the west coast, wanting to follow suit and implement their own recreational marijuana legislation. The legal marijuana industry is likely to outpace last year’s revenue by over 60 percent, expecting $2.3 billion of sales for 2014.