While the latest data from the U.S. Treasury Department indicates that some banks are starting to serve the marijuana industry, the hazy legal climate surrounding these types of transactions has apparently given the financial industry a license to gouge, charging retail pot shops and other members of the cannabis commerce outrageous fees that other companies are not forced to pay.
The banking industry, at least those with enough cajones to accept currency from the cannabis trade, has implemented an inconvenience tax, of sorts, to offset the risk of doing business with an industry that the federal government still deems illegal. A recent report from The American Banker claims that pot businesses are being charged as much as $3,000 per month for basic banking services, such as a checking account, while other members of the legitimate business community are only incurring monthly rates of around $50, and sometimes nothing at all.
Although cannabis companies and financial institutions alike understand that this type of price gouging is a racket comparable to shady street dealings with gutter thugs, paying these hefty charges has essentially become a necessary evil for those pot companies desperately seeking banking solutions. The National Cannabis Industry Association says it is so difficult right now for pot businesses to find bank accounts that it is almost worth shelling out an enormous vig just for the piece of mind.
Unfortunately, the banks know they can churn ridiculous profits by enforcing mafia rates on an industry simply attempting to stay alive amidst the potential for armed robberies, DEA shakedowns, and the inevitability of a federal income tax of as much as 90 percent. Yet banking officials argue that they are forced to squeeze higher-fees out of the cannabis industry because there are hazardous obstacles they must face in order to prevent the money laundering hammer from being dropped before the close of each business day.
“There are a number of legal, legitimate businesses that pay a higher price for their financial services,” said Andre Herrera, executive vice president of banking and compliance with Hypur. “Banks are looking at all the risk factors and saying, ‘I have more on the line to bank this industry and we’re going to bill them more to offset this risk.’”
It is important to understand that none of the banking options available to marijuana businesses these days are coming from nationally recognized financial institutions. The majority of these corporations are nowhere near interested in getting into bed with any industry that the federal government considers criminal. Even some of the smaller institutions, like Oregon’s MBank, have announced that they are shutting the doors on legitimate pot commerce because they simply cannot afford to play the game in a manner that is required by law to handle the heat of legal weed.
The U.S. Treasury Department issued new rules in 2014 in an attempt to make it easier for banks to do business with the cannabis industry. In addition, the Justice Department issued a memo to U.S. Attorneys asking them not to actively pursue financial institutions that have dealings with the cannabis industry. This sympathetic arm from the Obama Administration, however, was not binding enough to completely remove banks from the possibility of federal prosecution; therefore the majority simply remained unaffiliated.
“Banks aren’t interested in a flashing yellow light,” said attorney Jeff Gard, who represents some marijuana businesses in Colorado. “They need a green or red.”
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