Pot vote raises banking concerns
Oklahoma voters recently approved a ballot initiative making the Sooner State the 30th in the nation to legalize the use of medicinal marijuana. Oklahoma officials now have a lot on their plates, including creating or clarifying rules for cultivation, distribution, licensing, patient eligibility and more. But one important issue that will likely go unaddressed is where to put all this new money — the issue of banking.
As the cannabis industry takes off in Oklahoma (including the collection of that 7 percent sales tax), everyone from growers to packagers to transporters to sellers will need a place to put their money. For sellers, this is particularly important since few consumers pay for things in cash. In a 2017 survey, 44 percent of respondents said they prefer debit cards, another 33 percent favor credit cards, but only 12 percent choose to deal in cash. Also, no business wants to manage all of its activities in wads of dollar bills.
Banks, however, afford small businesses much more than just a place to deposit cash. They provide credit, payment systems, payroll support and book-keeping assistance. A business can hardly function without access to banking services.
For cannabis-related businesses, however, finding a bank has proved to be quite a challenge. This has been true in the other states and the District of Columbia where it has been legalized, and it will doubtlessly be a problem in Oklahoma.
The issue is that although state law may legalize some form of marijuana business activity, federal law does not. In fact, not only is selling marijuana a federal offense, the act of handling any money from a marijuana-related transaction is a form of money laundering. That’s a pretty big risk for banks, and, because of this, many are unwilling to do business with marijuana companies. That’s not to say all banks have shut their doors. About 360 banks and credit unions provide financial services to marijuana-related businesses, but they do so at their risk.
The problem isn’t merely one of convenience. This banking lock-out results in large amounts of cash being carried around in backpacks and satchels — increasing the risk of robbery, theft and violence. Even worse, federal policy on the issue remains in flux. In 2014, the Obama Treasury Department issued guidance on how banks could provide services to marijuana businesses. But in January, President Trump’s Justice Department issued a memo saying that it would step up enforcement of marijuana criminal laws. Since then, Trump has vowed to support legislation to protect marijuana activities in states where it has been legalized. One such effort is the Strengthening the Tenth Amendment Through Entrusting States Act, which is now before Congress and is legislation that Trump says he supports.
With medical marijuana now legal in Oklahoma, state leaders have a significant stake in seeing the banking issue solved. At the top of their list of things to do should be working with federal officials to develop a path forward for Oklahoma banks and medicinal cannabis firms to operate safely and efficiently. Allowing a tsunami of traceless cash to flow into the state’s economy from an industry that is already viewed by some as suspect is no way to run a railroad.