US Representative Earl Blumenauer is demanding to know who in the federal government intimidated an Oregon bank that had promised to work with legal marijuana businesses.
Oregon’s MBank made headlines last month when it announced it would be taking marijuana-related business in Colorado, where legal marijuana retailers struggle to find banking services. MBank has been taking deposits in Washington, the other state where recreational pot is legal, and has been serving Oregon-based medical marijuana dispensaries since September.
MBank’s plan was unique in that it would not have had any branches in Colorado. Cash deposits would have been picked up by armored-car services and brought to a Federal Reserve System bank, such as the one located in downtown Denver. Deposits would then have been credited to MBank’s account, which then would have credited to the account of the marijuana business.
But MBank announced it was pulling out of Colorado. MBank’s CEO Jef Baker told the Denver Post, “Following national press, the volume of inquiries in Oregon, Washington and Colorado has been so overwhelming that we don’t currently have the infrastructure to adequately support all these customers.”
However, industry insiders revealed to the Post that the reversal was due to intimidation by federal banking officials who told MBank executives that interstate banking for marijuana businesses was too risky, due to marijuana remaining illegal under federal law. Baker avoided questions about whether it was the FDIC that forced MBank out of Colorado.
Today, Congressman Earl Blumenauer, who is leading the effort in Congress to address state-legal marijuana banking issues, called for answers at the federal level. Blumenauer wrote a letter to Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg asking for clarification on what guidance the FDIC provides to banks who offer financial services to marijuana-related businesses, and what role, if any, the FDIC played in MBank’s decision to abruptly suspend operations in Colorado.
“Everyone acknowledges the insanity and unfairness of requiring legal businesses to pay their taxes with shopping bags full of $20 bills,” Blumenauer wrote. “With legal marijuana sales projected to hit $8 billion by 2018, the need for regulators to get this right is as great as the need for access to reliable banking services. In addition to obvious business needs, this is a matter of grave public safety.”
Blumenauer specifically asks why FDIC hasn’t responded to last February’s guidance by the Financial Crimes Enforcement Network (FinCEN) on how banks can work with legal marijuana businesses, whether or not FDIC assured MBank it could do business in Colorado and whether FDIC was involved in advising MBank to pull out of Colorado.