Bankers told legislators this week they need more clarity when it comes to laws that allow them to provide checking accounts, loans and other financial services to marijuana businesses.
Salal Credit Union of Seattle currently counts five marijuana producers and four retailers among its customers, Russ Rosendal told a joint legislative committee on Monday.
The bank follows guidelines from the so-called “Cole memo” released by the U.S. Department of Justice last year. The memo said the federal government will only enforce eight areas of the federal Controlled Substance Act in Washington and Colorado.
However, the memo contains “exceptions and loopholes,” Rosendal said, and it doesn’t prohibit the federal government from launching investigations or prosecutions. “So while it was a step forward, there are still a lot of issues there,” he said.
Numerica Credit Union also provides services to marijuana businesses. Bank representative Lynn Ciani said one reason she thinks more banks aren’t providing financial services to the marijuana industry is because of the criminal penalties that the DOJ can impose for violating federal anti-laundering laws.
“Although we are used to the large civil penalties and that risk, the whole going to jail thing and wearing orange is probably causing people to take a second thought,” Ciani told the committee.
Both banks also follow guidance released in February by the U.S. Treasury Department and the U.S. Justice Department.
However, a number of issues remain to be sorted out.
Rosendal said it is unclear what tax deductions a marijuana business is allowed to take. He said banks are also unsure about forfeiture and seizure laws. “As long as financial institutions are unclear about what collateral they have…it is going to be hard to lend any money to 502 businesses,” he said.
Credit cards are also a problem, Rosendal said, because companies like Visa or Mastercard don’t allow their products to be used for marijuana. “Until these I-502 businesses can do electronic transactions, they’re going to be forced to be in a cash business,” he said.
Watch the full meeting at this TVW link.