Archive for the ‘banks’ category

Navigating the Marijuana Industry Labyrinth

January 12th, 2015

(This post is the first in a series providing insights into the legal marijuana industry. It is a guest post from the staff at MedMen.)

While ultimately an exciting endeavor, opening a marijuana business can be a tedious process involving a multitude of legal and monetary procedures. A close eye for detail is required. Dealing with rules and regulations and licensing applications, meeting zoning requirements, preparing concise and detailed business plans and operational protocols, attending local and state meetings, planning to manage operations once certified, and so much more are big tasks. Think: 24-hour notaries, multi-disciplined organizational issues and consensuses, leaps of faith toward the long-term investment, preparing management deals, and accountability — and it does not stop there.392_weed_grow

Starting a successful medical and/or recreational marijuana business typically requires commitments of hundreds of thousands — and at times even millions — of investment dollars. Some states are moving in the direction of merit-based oligopolies that require substantial liquidity in order to succeed and multi-million dollar bonds to further show financial security. Marijuana has graduated to a big-business process.

Securing real estate and building a qualified team for any marijuana industry venture are two of the earliest and most fundamental aspects of obtaining a license. Locking down locations that make sense demographically while still satisfying strict locational regulations is not cheap. Landlords realize the tight supply, so favorable terms are hard to come by, meaning substantial capital is necessary. The applying team must also be comprehensive. Building a solid team, not only financially but resourcefully, is crucial in legitimizing marijuana businesses. Solid teams include healthcare to business management professionals, legal experts to accountants, horticulturalists to those experienced in law enforcement and security, and beyond. Not to mention experts to manage the marijuana-specific aspects of the operation. This range of experience is hard to come by for a mom-and-pop operation.

The complications do not end once a license is secured. Banking in the marijuana industry is currently in flux. Many banks refuse to deal with marijuana-related businesses; however, recent federal protocols have safeguarded banks willing to commit to these businesses. Still, banks are looking into the financial histories of those applying for accounts. A mom-and-pop operation is at a disadvantage to a big-business operation whose members can show ties to multi-million dollar companies operating their finances spotlessly. Accountability is crucial, and past business practices are just about the only way to show it in the emerging marijuana industry.

Ultimately, every state is going to have different marijuana laws, just as every state has different alcohol laws. Some will be more conducive (or even limit) the marketplace to bigger businesses. Others will foster an environment that ensures smaller businesses can compete. There could even be some where marijuana sales are limited to state-run stores.

States are going to experiment, learn from their experiences, and learn from each other, just as we have seen take place with alcohol in the 80 years following the end of prohibition. In any case, it will be fascinating to watch it unfold.

Departments of Justice and Treasury Release Marijuana Banking Guidance

February 14th, 2014

Today, the Department of Justice and the Financial Crimes Enforcement Network division of the Treasury Department released long anticipated guidance to banks and other financial institutions on how they can interact with marijuana businesses that are licensed under state law.

Under current regulations, financial institutions are required to file suspicious activity reports when they suspect the transaction has a drug connection. The new guidance creates a three tiered system for these reports: marijuana limited, marijuana priority, and marijuana termination. This will allow these institutions to work with marijuana businesses as long as they were operating in accordance with state laws and regulations. The Department of Justice reserved the right to pursue criminal charges when they suspect businesses are breaking the guidelines they released late last year and would still require banks to report any activity they suspect to be as operating outside of state regulations.

“Now that some states have elected to legalize and regulate the marijuana trade, FinCEN seeks to move from the shadows the historically covert financial operations of marijuana businesses,” noted FinCEN Director Jennifer Shasky Calvery in a press release. “Our guidance provides financial institutions with clarity on what they must do if they are going to provide financial services to marijuana businesses and what reporting will assist law enforcement.”

“This reduces the burden on banks,” FinCEN stated during a briefing on the memo, “Marijuana under federal law requires a SAR. Now, the necessity is limited, reducing the banks’ burden a bit and more importantly clarifies where law enforcement focuses its attention.”

While this is a good start when it comes to allowing marijuana businesses to operate the same as those in any other regulated industry, memos such as these can be ultimately overturned by future administrations. To make this change lasting and binding, Congress must now act to codify it into law. The Marijuana Business Access to Banking Act is currently pending before the House of Representatives and would do just that. You can click here to quickly and easily write your representative and urge him/her to support this important legislation.

You can view the full text of the memo from FinCEN here. The DOJ memo can be viewed here.

Congressman Polis’ Grills Attorney General Holder About Fed’s Medical Marijuana Policies

December 8th, 2011

Update: Huffington Post article and C-Span video.

I’ve spoken to two reporters today inquiring about Colorado Congressman Jared Polis’ medical cannabis-related questions to Attorney General Holder at a congressional committee hearing that was otherwise a ‘bloodbath’ for Holder—getting grilled about the guns and Mexico fiasco—when Polis, who is not a member of the Judiciary Committee, was allowed to ask Holder two questions about medical cannabis enforcement.

Generally written…

Polis first wanted assurances that Colorado’s medical cannabis dispensaries/cultivation centers compliant with state laws—unlike California’s medical cannabis businesses that are not regulated by the state—are not a Department of Justice (DOJ) target. Holder affirmed the basic tenets of the previous Ogden and Cole memos, and wouldn’t provide assurances, but, re-iterated the DOJ stance that enforcing medical cannabis laws, notably in a state like Colorado with its rules and regulations, and with limited federal resources at hand, is a low law DOJ enforcement priority.

The second Polis question was about banking and medical cannabis businesses in Colorado, where he pushed Holder to acknowledge that the DOJ is not placing a priority on interfering with state compliant medical cannabis businesses and banking concerns.

I assume there will be news and industry coverage later today and tomorrow about this unexpected, but informative exchange between Representative Polis and Attorney General Holder.

Latest Casualty In Obama’s War On Pot: The First Amendment

October 14th, 2011

The First Amendment is the latest casualty of the Obama Administration’s stepped up war on cannabis.

On Wednesday, the US Attorney for the southern district of California, Laura Duffy, announced her intent to target media outlets — in particular alt-weeklies like the San Diego Reader and the San Francisco Bay Guardian — that accept advertising dollars from medical cannabis operations.

Feds to target newspaper, radio marijuana ads

via California Watch

U.S. Attorney Laura E. Duffy, whose district includes Imperial and San Diego counties, said marijuana advertising is the next area she’s “going to be moving onto as part of the enforcement efforts in Southern California.” Duffy said she could not speak for the three other U.S. attorneys covering the state but noted their efforts have been coordinated so far.

“I’m not just seeing print advertising,” Duffy said in an interview with California Watch and KQED. “I’m actually hearing radio and seeing TV advertising. It’s gone mainstream. Not only is it inappropriate – one has to wonder what kind of message we’re sending to our children – it’s against the law.

… Duffy said she believes the law gives her the right to prosecute newspaper publishers or TV station owners.

“If I own a newspaper … or I own a TV station, and I’m going to take in your money to place these ads, I’m the person who is placing these ads,” Duffy said. “I am willing to read (the law) expansively and if a court wants to more narrowly define it, that would be up to the court.”

Whether or not Duffy’s unconventional interpretation of federal law has any legal merit is, of course, beside the point. Her intent is to create a climate of fear that is so pervasive that media outlets ‘willingly’ cease accepting advertising revenue from dispensaries and other like-minded business.

Such threats are nothing new for the federal government, which in recent months has successfully utilized similar tactics to coerce state and local banks to drop their accounts with state-sanctioned marijuana-related businesses and to intimidate landlords who rent their properties to tenants involved in medical cannabis facilities.

Yet despite the government’s heavy-handed behavior, California bureaucrats have remained largely — and disappointingly — silent regarding the Justice Department’s intimidatory tactics. That is why it is more important than ever that you send the Obama Administration a clear and consistent message here.

Banks Refusing To Deal With Medical Marijuana Dispensaries

September 20th, 2011
​Even as protesters decrying how out of touch bankers are with everyday Americans are occupying Wall Street, home of America's banking industry, many financial institutions in states where medical marijuana is legal are refusing to do business with cannabis dispensaries.Sixteen states and the District of Columbia have legalized medicinal marijuana, but possession or sale of cannabis for any use is still illegal under federal law. It is this disconnect that is giving rise to an unwillingness on the part of many banks to do business with the marijuana collectives.The banks fear that federal regulators will target them, reports Kathryn Glass at Fox Business, because the federal government says that banks which do business with dispensaries are supporting activities that are illegal under federal law. Continue reading "Banks Refusing To Deal With Medical Marijuana Dispensaries" >