Imagine if your neighborhood pharmacy could only accept cash because it wasn’t allowed to open a checking account and had to pay exorbitant fees on credit card transactions. Same with your favorite spa or local health food store.
All perfectly legitimate businesses. All coping with an unending string of banking bad dreams.
That’s what medical marijuana dispensaries in Colorado have repeatedly faced. Colorado voters legalized the use of marijuana for medical purposes in 2000, and since that time, dispensaries have flourished. But as I reported in April, while a few entrepreneurs have seen opportunities in providing financial services to the budding industry, for the most part, traditional bankers have shunned medical marijuana providers.
Diane Czarkowski, an owner of Boulder Kind Care, has had financial institutions pull the plug on her bank account more than a half-dozen times since the business was launched two years ago.
Now, according to reports in the Boulder (Colo.) Daily Camera and Denver Westword, the very last bank in the state openly doing business with medical marijuana sellers, Colorado Springs State Bank, has sent a letter to medical marijuana account holders telling them to close their accounts by the end of September.
That left Boulder Kind Care and other marijuana dispensaries scrambling to find a new provider to process their checks and credit card transactions.
While Czarkowski has found another bank that will open a checking account for Boulder Kind Care, she’s still wading through the possible companies that will process credit cards — and not charge outrageous fees.
She says Boulder Kind Care caters to an “older client base,” and about one-third pay for their purchases with credit and debit cards.
While the concept of pulling out your plastic to pay for pot may leave people in most of the country shaking their heads, in a handful of states, medical marijuana dispensaries are just as legal as CVS or Whole Foods.
But trying telling that to the feds and the financial types.
The key stumbling block is the disconnect between federal and state marijuana laws. While 17 states and the District of Columbia have legalized marijuana for medical use, the U.S. Drug Enforcement Agency classifies cannabis as a Schedule 1 drug, with a high potential for abuse and no currently accepted medical use, according to the lobbying group NORML (the National Organization for the Reform of Marijuana Laws).
“There are unresolved issues with regulations, law enforcement and other
agencies that need to get resolved before the industry can progress and become
bankable,” John Whitten, senior vice president of Colorado Springs State
Bank, told the Daily Camera.
Czarkowski thinks the lack of legitimate banking will push some in her industry to fly under the financial radar. That’s a shame, she says, because the paper trail created by allowing customers to use credit rather than cash makes it “harder for unethical businesses to hide.”
One idea now being kicked around, says attorney Jessica Peck, is to serve the industry by launching its own credit union.
May we suggest a name?
Rocky Mountain High CU.