Following the timeline of events involving weed since the start of the new year has been fascinating. They revolve around tales of insane profits to go along with respectful and satisified customers. Those, however, tend to run neck and neck with stories of individuals and parties vehemently against the legalization of the controversial plant.
Consider this installment part of the latter.
With the marijuana business becoming more and more legally profitable, people like Ryan Kunkel are opting for places to store their funds. And as it turns out, banks aren’t exactly attempting to act as a cordial suitor.
The problem underscores the patchwork nature of federal and state laws that have evolved fitfully as states have legalized some form of marijuana commerce. Though 20 states and the District of Columbia allow either medical or recreational marijuana use — with more likely to follow suit — the drug remains illegal under federal law. The Controlled Substances Act, enacted in 1970 classifies marijuana as a Schedule I drug, the most dangerous category, which also includes heroin, LSD and ecstasy.
As a result, banks, including state-chartered ones, are reluctant to provide traditional services to marijuana businesses. They fear that federal regulators and law enforcement authorities might punish them, with measures like large fines, for violating prohibitions on money-laundering, among other federal laws and regulations.
Side Note: Saying marijuana is as dangerous as heroin, LSD and ecstasy is like saying Mark Sanchez is as dangerous as Tom Brady on a game-winning fourth quarter drive because they, in essence, play the same position. That may not even make sense, but neither does the Controlled Substances Act which was enacted the same year the Beatles disbanded.
Facing no shortage in customers, the most pressing issue hovering over the budding business of weed (I couldn’t help myself) is indeed banking, according to Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C.
Saying legal marijuana sales in the United States could reach $3 billion this year, Mr. Smith added: “So much money floating around outside the banking system is not safe, and it is not in anyone’s interest. Federal law needs to be harmonized with state laws.”
So what exactly do 2014’s coolest entrepreneurs do with all the money? Exactly what one would think they’d do. Money’s harbored in brown paper bags, tupperware or in Chipotle or Nordstrom bags. And when bank accounts are established under false pretenses, they’re normally shut down months later because of the inordinate amount of cash deposits. Driving around with the impressive amounts of cash in the trunk is no different than when the weed money is “dirty” because the threat of getting got still looms large.
In other words, Mary Jane is, as expected, a rouge industry much of corporate America isn’t willing to recognize as a legitimate source of income. Sooner or later, however, one has to think an extra $3 billion will entice even the squarest of squares.
Clear 10-15 minutes to read Serge Kovaleski’s in-depth feature in the New York Times on the issue. And as exasperating as the times are right now for those making a living off selling weed, try not to fret too much. It’s not as if they don’t have the world’s greatest stress reliever* within arms reach.
* – Well, besides, you know.