Banks Remain Cautious, Washington Pot Entrepreneurs Turn To Cash, Bitcoin
Attorney General Eric Holder recently said that legal marijuana businesses need access to bank accounts as a public safety issue. Bankers and pot entrepreneurs hailed those comments as an important step. But they said it will take a change in federal law to make banks truly open their doors.
Although recreational marijuana has been legal in Washington for more than a year, federal law still prohibits banks from dealing with those businesses. Holder said he’s working with the Treasury Department to try to facilitate access to bank accounts.
A Justice Department spokesman said the changes may not take the form of a change in law or new regulations, but instead as "guidance" for prosecutors and law enforcement. Jim Pishue, president of the Washington Bankers Association, said it’s not clear how much protection the new federal guidance will provide banks.
“It depends, I think, on two things,” Pishue said. “One is how strong the guidance is, and the second is, banks will then have to decide individually whether they feel the guidance provides them enough safe harbor for them to enter into banking this business.”
This month the New York Times wrote a front-page feature on marijuana business owners in Seattle paying state taxes with mountains of cash.
Sean Green, himself a marijuana business owner, credits that story with helping push federal officials to act. Green said he has been able to get bank accounts, but the process is difficult and time consuming.
“You’re nervous that you’re doing something wrong when you go in there because you can’t give full disclosure or you won’t get your account," he said. And they tend to get terminated abruptly. "Then if you only have your bank account for three weeks, it didn’t serve much of a purpose."
Green said it was “amazing” when he received an email from his lawyer about Holder’s comments. But he agreed with Pishue that banks are unlikely to change their practices without a change in the law.
In the meantime, Green said his medical marijuana dispensaries are going to accept the digital currency Bitcoin. He concluded that the novel currency would be a good alternative to the options they have now.
Bitcoin payments are made via email, often from the buyer’s smart phone, at the point of sale. Then businesses can trade the Bitcoin for dollars. The value can be more volatile than other currencies, but it functions outside the banks and credit cards networks that are forbidden to take his business.