The Chicago Tribune reported late last week about a new element in the struggle to make medical marijuana easily accessible to those who need it: the banking industry. Specifically, because of pressure from federal authorities, many banks and credit card companies are refusing service to legal-within-their-states MMJ businesses.
Owners, operators, patrons and supporters of MMJ businesses (mainly dispensaries) says the banking industry is “just saying no” to their business – which earns an estimated $1.7 billion each year – because its afraid of drug trafficking and money laundering laws.
One of the largest American banks, Bank of America Corp, told the press that it received a warning from the Drug Enforcement Administration (DEA) as long ago as 2007 or 2008 and began withdrawing banking services from MMJ dispensaries at that point. Other banks have also been warned of the potential for legal liabilities if they continue to do business with dispensaries.
In an interview with the Tribune Sue Harank, a co-owner of Alpine Herbal Wellness, a dispensary in Denver, CO spoke of her efforts to find a bank after her shop a year ago in March. She described the situation as a “nightmare,” and said that two banks and a credit union all closed her accounts within six months.
Harank elaborated, “Both banks and the credit union pursued our business initially and said they had talked to the corporate office and run it through legal, but a month or two later they all reversed themselves.”
According to the financial analysis firm See Change Strategy, the potentially lucrative MMJ business is having issues because even though dispensaries have been legalized in some states, the federal government maintains the states have no power to authorize such businesses, and still considers them to be illegal.
Keith Stroup, founder of the nationwide lobbying organization NORML, also spoke to the press, explaining, “They’re operating according to state law, but because of conflict with federal law, they can’t get credit card processing services and they can’t keep bank accounts open.”
In October, 2009, David Ogden, Deputy U.S. Attorney General, issued a memorandum saying that the U.S. Justice Department wasn’t likely to pursue or prosecute individual patients who were using medical marijuana under their states’ medical use laws. At the same time, however, Ogden also said that, “…prosecution of commercial enterprises that unlawfully market and sell marijuana for profit continues to be an enforcement priority of the department.” According to that memo, excessive profits or evidence of money laundering could be reasons that dispensaries would be targeted.
Shirley Norton, a spokesperson for BofA said that the bank began “exiting its relationships” with dispensaries after the DEA alert. She reiterated to the press. “We do not provide banking services to medical marijuana businesses.”
The DEA confirmed this, when its spokesperson, Rusty Payne confirmed that Bank of America had been warned that medical marijuana, “…medical or otherwise…” is illegal under federal statutes and that offering banking services to MMJ dispensaries could “…open you up to liability.”
So far, financial institutions have not been specifically targeted for prosecution by the Justice Department, but department spokesperson Jessica Smith has reminded us of “guidance letters” drafted by federal prosecutors in Arizona, California and Illinois, all of which describe MMJ dispensaries as drug trafficking organizations.