In Canna-Business, Let the Bankers Beware
If you’ve been paying attention to the news in the last month, you have probably heard about the Federal Government’s move to relax restrictions on the major financial institutions for doing business with marijuana doctors and dispensaries. Now this is probably a bit of a red herring, because the way it was picked up by the mainstream media is that banks would be immune to prosecution for doing business with marijuana shops who may be in violation of Department of Justice rules.
What you may not know is what the memo actually stated, which in a nutshell is this: in Washington and Colorado (the two states whose voters have enacted legislation for legal cannabis) the banks who support legal marijuana businesses are not allowed to violate one of the DOJ’s “Eight Areas of Concern” which are as follows (from this article on Huffington Post):
- The distribution of marijuana to minors;
- That revenue from the sale of marijuana might go to criminal enterprises, gangs or cartels;
- The diversion of marijuana from states where it is legal under state law in some form to other states where it is illegal;
- State-authorized marijuana activity may not be used as a cover or pretext for the trafficking of other illegal drugs or conducting other illegal activity;
- Violence and the use of firearms in the cultivation and distribution of marijuana;
- Inebriated driving as well as the exacerbation of other adverse public health consequences associated with marijuana use;
- Cultivation of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands;
- Prevention of marijuana possession or use on federal land.
What this all boils down to is a kind of pre-emptive mea culpa, saying “we’re not going to restrict financial institutions from providing merchant services to businesses who are acting in accordance with state laws, but if we find out that those businesses are breaking the law, we’re not going to grant you immunity from investigation and possible prosecution associated with whatever violations we find.” It shifts the onus of making money vis a vis marijuana onto Washington and Colorado’s state legislatures, requiring them craft legislation which will regulate the banks, which places entrepreneurs like dispensary owners, doctors, shop owners and webmasters in a weird position when it comes to processing payments from consumers. There’s rampant debate in both Colorado and Washington about what should be done and how strict the legislation should be.
My feeling is that if you’re doing business above the board and can document your earnings, you have nothing to worry about. If business owners are doing something shady with their marijuana dollars, they’re going to do it regardless of whether they have a Verifone device at the counter or not. Any DOJ investigation worth its salt should show whether or not there was direct collusion between the financial institution and the perpetrator to elude or sidestep the Eight Areas of Concern.
It’s kind of funny to watch all the fat cats (bankers, lobbyists and politicians alike) in Washington scrambling, trying to figure out what the hell to do with all the marijuana money and ganja-preneurs flooding the country as the tidal wave of states decriminalizing and legalizing cannabis gains more and more steam. You see, politicians aren’t dumb; they know there’s a shitload of money to be made in the field, both in terms of taxes and commerce in general. And typically those legislating the flow of industry dollars are usually the ones who stand to benefit the most from their actions on the Hill. So obviously the suits want to get a piece of the pie, but they have this thing called an election to win, and in order to do that, they have to garner the votes of a largely inattentive and unintelligent constituency.
What these congressmen are really afraid of is that voters will revolt in displeasure by voting them out of office. They’re assuming (erroneously in my opinion) that the voting public is married to the “black market” and “reefer madness” stigmas associated with marijuana. You know what I’m talking about: multinational drug cartels, violence, bribery, sale to minors, not to mention that whole “Gateway Drug” malarkey. Basically they’re afraid of legitimizing an industry that’s virtually impossible to regulate on a large scale and they’re trying to create protections for banks and investors who want to reap in the rewards of weed with immunity to any of the risks associated with it.
What do you think?
Should banks be prosecuted for providing financial services to marijuana businesses who commit DOJ violations?
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