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Marijuana dispensaries need access to banking system

Nearly two years after Massachusetts voters approved medical marijuana, nine distribution centers are to open next year in places like Brookline, Lowell, Salem, and Quincy. The state licensing process for these dispensaries has been convoluted. And yet that path seems easy to navigate compared with the latest obstacle: the banking system. Because the drug remains illegal under federal law, marijuana-related businesses nationwide have struggled to find banks that will accept their deposits. This is creating a bizarre and dangerous cash management situation for businesses that Massachusetts and other states treat as legal. Federal lawmakers and regulators should acknowledge this and allow marijuana dispensaries to use the banking system safely.

Nationwide, legal marijuana sales are expected to reach about $2.6 billion this year. In February, the Obama administration announced new guidelines for banks to legally do business with state-regulated marijuana merchants. But the action doesn’t prevent federal authorities from prosecuting or otherwise penalizing those banks. Not surprisingly, banks are still leery of serving the on-the-books marijuana industry. Recently, it was reported that only 105 banks and credit unions — 1 percent of the total nationwide — provide banking services to marijuana dispensaries, according to a top federal official.

The issue is most acute in Washington and Colorado, the only states to allow sales of recreational marijuana. But three-quarters of Americans now live in states with marijuana laws more lenient than the federal government’s. Thirty-five states and the District of Columbia allow some form of medical marijuana. In November, Alaska and Oregon voters will decide whether to legalize recreational marijuana.

In light of a shift in public sentiment, it’s worrisome to hear of marijuana business operators having to hide tens of thousands of dollars in cash in offices and carry it around in paper bags because banks refuse to take their money.


The cash stockpiling has created unintended consequences: New security businesses have sprung up to protect the cash that marijuana merchants are forced to transport. A Seattle marijuana businessman told The New York Times: “We have to play this never-ending shell game of different cars, different routes, different dates, and different times.” Meanwhile, owners of marijuana stores have to pay tens of thousands of dollars in state taxes using cash. Even more puzzling: Legal marijuana businesses without bank accounts are charged a 10 percent penalty by the IRS for paying payroll taxes in cash.

Congress seems to be doing something about the problem. This summer, the US House approved a bipartisan amendment that allows banks to accept deposits from marijuana stores and dispensaries. The bill prevents the Treasury Department from penalizing financial institutions that provide services to marijuana businesses that are legal under state law. The Senate should quickly pass it so that marijuana businesses can at least begin to apply for the banking services they need.