Coming Soon: Cannabis Banking Regulations
January 27th, 2014
Policy, Top Story
Attorney General Eric Holder indicated last week that the Obama Administration was planning to roll out regulations soon that would provide legal marijuana sellers with access to the banking sector. At the University of Virginia, Mr. Holder suggested that banking was necessary in order to avoid having large amounts of cash lying around that could encourage crime.
Processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges which has kept nearly every bank out of reach for legal marijuana sellers. The legalization of recreational marijuana in Colorado and Washington has put this issue in the limelight as sales have increased these cash piles significantly.
“You don’t want just huge amounts of cash in these places. They want to be able to use the banking system. There’s a public safety component to this. 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,” said Mr. Holder.
Banking access promises to not only mitigate the risk of crime due to cash stockpiling, but also increase access to capital for expansion and development. For example, dispensaries looking to expand into new areas usually have to finance the new property in cash instead of obtaining a commercial real estate loan that can reduce the cash outlay by about 75% on average.
According to Johnny Green of Weed Blog, “Right now, a lot of businesses have to rely on angle investors to help them out. It would be nice if businesses could go to a traditional bank and get a business loan, instead of mortgaging part of their future in order to expand.”
In the end, investors and public companies in the cannabis industry will be closely watching for new guidance from the Obama Administration.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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