Illinois Banks Should Be ‘Careful’ with Cannabis
If you are in the cannabis industry, in any capacity, you know how difficult getting access to banking services can be. Many banks are reluctant to do business with the cannabis industry because marijuana is still illegal federally, which could open banks up to prosecution. However if you are an entrepreneur in Illinois, getting access to banking services may have just gotten a little easier.
According to the Chicago Sun-Times, on October 8, 2014, U.S. Attorney Zach Fardon took questions regarding Illinois moving to medical marijuana next year. One reporter asked Fardon whether banks in Illinois would be able to do business with medical marijuana companies. Although visibly uncomfortable with the question, Fardon replied by saying that banks will not “come on our radar for prosecution” as long as they are “careful,” “transparent” and “follow the law.”
Although the comments of one U.S. Attorney may not be far sweeping legislation, appearances matter. This is one of the first times the banking industry has gotten any type of assurance that banks will not be prosecuted for doing business with the cannabis industry.
Earlier this year, the U.S. Department of Justice released a memo stating that while banks doing business with the cannabis industry can still be prosecuted, priority will be given to those banks doing business with gangs or unscrupulous people providing cannabis to minors. Far from a comforting reassurance, most banks took one look at the memo and said “no thank you” to the cannabis industry.
Consequently, there are many marijuana dispensaries that are overflowing with cash. Unable to get even the most basic of banking services, many have turned to safes, armored cars and armed guards to protect their livelihood. This has created an untenable situation, fraught with theft and armed robbery.
In the absence of adequate protections for the industry, there has been some effort on the state and federal level to alleviate this situation. In June, Colorado passed a banking bill that would allow the industry to pool their money into uninsured cooperatives, but it has done little to fix the problem.
The U.S. House of Representatives also passed a bill which would permit banks to do business with the cannabis industry, but unfortunately it languishes in the Senate. Given the widespread threat of Ebola and ISIS, it will probably be a long time until the Senate picks up this bill. For now, it looks like it is up to the states.
The cannabis banking crisis is definitely not over, but Fardon’s comments signal that it is moving in the right direction. Although his statements did not end the crisis overnight, reassurances like the one Fardon gave will serve to give some banks in Illinois a little more confidence when dealing with the cannabis industry.
Ultimately, the way to solve this problem is not through assurances or memos, but through legislation. On one hand, it is disappointing that legislators are mostly ignoring this issue, but on the other hand, it is our responsibility to make this issue visible.
If you want things to change, call your state representative and ask, “Why don’t you want to create jobs?” Ask them, “Why don’t you want to protect those that help the sick and dying?” Ask them, “Why are you against the free flow of capital?”
The only way to end the cannabis banking crisis is for the industry to organize and advocate because at the end of the day, if there are not systems in place to protect your capital or your investment, what’s the point?