Banks shut out retail pot industry
(Photo: MGN Online)
DENVER — Banks have shut out recreational marijuana dispensary owners, which is causing extra headaches for the budding industry.
According to Colorado Public Radio, dispensary owners have been prevented from opening up checking accounts or setting up credit card processing at banks, driving the industry to operate entirely on cash.
Marijuana is still illegal under federal law and, since most banks are federally insured, dispensaries are being turned down from using any of their services.
Jamie Lewis, a Denver dispensary owners, told CPR she had to open seven different bank accounts over the last several years because the banks shut them down after 30 to 60 days.
This drove Lewis to turn to an all-cash business, but she said this type of financial model is challenging in terms of taxes and paying business expenses.
The model is also dangerous because it puts these businesses in a vulnerable position and requires a lot of trust between the owners and employees, reported CPR.
“It is concerning when you go to turn to someone to make a payment: do I want to give you $13,000 to drive across town with?” Elliot Klug, owner of the Pink House dispensary chain, said.
Marijuana attorney Sean McAllister added that operating only in cash could lead some owners into bank fraud. He asked for involvement from the federal government to solve the issue.
Colorado representative Ed Perlmutter proposed a bill to allow banking in the pot industry, but the verdict on the legislation has been stalled.