With California set to legalize recreational marijuana next year, potrepreneurs are already projected to make $5.2B in 2018. Problem is, they currently don’t have anywhere to put their dern “drug money.”
Even though marijuana has technically been a legit business for two decades (medical pot has been legal in CA since ‘96), many banks risk losing their federal charter if they work with weed companies.
Cannabis is legal for medical use in 29 states and recreational use in 8 — but it’s still labeled a Schedule 1 narcotic, meaning, in the eyes of the federal government, weed is as harmful as black tar heroin.
In other words, weed is technically still illegal under federal law, and the feds can shut a bank down with little notice for working with “illegal” businesses.
But legit weed companies can’t just stuff money in their mattresses…
Which means some business owners have had to get creative in order to store funds — like good ol’ fashioned money laundering.
Donnie Anderson owns a dispensary in South Los Angeles and deposits his earnings into an account that his bank thinks belongs to a property management firm.
Many have also turned to cryptocurrency as a form of “banking,” but crypto’s value fluctuates constantly making it less reliable than that cold hard green (cash, not weed).
So what’s California doing about it?
On a federal level, the Financial Crimes Enforcement Network released guidelines that would allow banks to work with marijuana companies, but according to Forbes, only 5% of the nation’s banks have bothered to do so.
California Treasurer John Chiang has made a hard push to reform cannabis banking in the state, but currently, the stakes are just too high for banks to go against their federal mandates.
Yo, Feds, in the spirit of doobie smokers everywhere — be chill, wouldya?