By Bill McKee
Moscow-Pullman Daily News, Moscow, Idaho.
As entrepreneurs lured by the promise of profit scramble to get their businesses ready for the launch of the new recreational marijuana industry in Washington, one big question remains — what will they do with all that profit?
Though Washington and Colorado have legalized the sale and possession of small amounts of marijuana, it remains illegal under federal laws, and banks remain concerned over the idea that allowing such businesses to open accounts with them could leave banks liable.
So far, only one Spokane Valley-based credit union has announced it will take on clients in the marijuana industry.
While the U.S. Department of Justice released a memo in February designed to give guidance to banks on how to deal with marijuana businesses, the majority of the banking industry seems willing to wait until they have greater assurances, which would only come in the form of federal legislation or an executive order.
Some efforts have been made on that front. U.S. Rep. Denny Heck, D-Wash., has co-sponsored a bill, H.R. 2652, to create protections for institutions that provide financial services to marijuana-related businesses.
“Legitimate business needs access to the banking system,” he said in an emailed response to the Daily News. “If these businesses become entirely cash-based operations, law enforcement’s ability to detect and prevent crimes like money laundering, theft and illegal sales or purchasing becomes much more difficult.”
The bill has yet to see any real discussion by Congress, but it highlights some of the issues raised by the new industry that is being forced to deal only in cash — which apparently has led to the creation of an entirely new industry.
On a recent trip to Denver, the executive director for the marijuana advocacy group NORML, Allen St. Pierre, said he was introduced to a new service that has been developed in Colorado to fill the need — private armored car services that pick up cash from the new marijuana businesses and deliver it to … an unknown location.
“Armed men go into a retail establishment, pick up the cash, and that’s where the big mystery begins. Whether it’s going to a deposit box, to a co-op or banking collective or it’s just going to a safe house somewhere, we don’t really know,” he said.
St. Pierre said it’s ironic that such efforts have been made to ensure the tracking of the marijuana products through the process “from seed to sale” through the use of radio frequency ID tags, but no effort at all is being made to determine what’s happening to the money once the product goes out the door.
“This is one of the last loopholes that needs to be closed effectively so that this commerce can come above ground,” he said. “In the end the question is: Where is this money going? Is the government properly monitoring this for the purpose of tax collection and to ensure that there’s no corruption going on?”
The only financial institution willing, as of yet, to make the leap to accepting clients in the recreational marijuana industry is Numerica Credit Union.
“We’re concerned about the well-being of our members and our community,” said Kelli Hawkins, communications manager for Numerica. “It’s known that there are certain crimes that happen around cash-based businesses, so by allowing these businesses to manage their finances through a credit union account we’ll be limiting the crime that could happen.”
However, because two of the three communities where they have branches, Wenatchee Valley and Tri-Cities, have adopted moratoriums against recreational marijuana businesses, they will be accepting applications only from businesses in Spokane, and only from producers and processors, not retailers.
“After reviewing the regulations we felt that in order to maintain the safety of the credit union there were limitations we need to put on there,” Hawkins said. “It’s going to be much easier to regulate and track things for the producers and processors, and we want to make sure we meet the regulations that were set forth by the attorney general.”
While some local entrepreneurs may be OK with holding on to all that cash, the majority will be left wondering where to stash it and how to get it there safely.