Banking issues still plaguing pot industry aspendailynews.com electricity human body

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“I got a notice from the bank where I had been doing business for years that they were closing all my accounts,” Lacroux said. “And I mean all of them. Not only the accounts I had for my various businesses, but also my personal accounts — even my kids’ college funds. I had been doing business with that bank for years, and the amount we are talking about was up in the millions.”

“I don’t want to name names, but the branch manager of the bank where I had my personal and business accounts had come out on the record in Basalt as being against marijuana,” Lacroux said. “I think it is more than a coincidence that, shortly after our announcement, he notified us that he was closing our accounts. I think we had two weeks to make other arrangements.”

Lacroux scrambled to find a new bank. He did, but, shortly after opening new accounts, he was informed that, once again, because of his association with the marijuana industry, those accounts would be closed. This, Lacroux is fast to point out, occurred before his license to open a medical marijuana dispensary had even been considered by the Basalt Town Council, much less approved.

The owner of an Eagle County grow operation, speaking anonymously about an ancillary issue in October, said banking and the process of conducting basic financial transactions associated with running a business was the most vexatious component of his operation.

“Banking is still very much of a challenge,” said Kelly, who owned several medical marijuana shops before going to work for MIG, an industry trade and advocacy organization with 500-plus members. “The main issue is the fact that marijuana is still illegal under federal law. That translates into a hesitancy on the part of banks to associate with businesses that are involved with pot — from growers to retail operations.”

“The concern on the part of banks is more centered on FinCEN — the Treasury Department’s Financial Crimes Enforcement Network,” Kelly said. “The federal government has issued guidelines under the Bank Secrecy Act for businesses associated with the pot industry.”

Those guidelines are more commonly known as the Cole Memo. James Cole, a former Justice Department deputy attorney general, issued guidelines to prosecutors during the Obama administration after many states had legalized pot in one form of another.

Rather, it clarifies the manner by which banks must do so, the gist being that it is incumbent upon the banks to make sure that they do not run afoul of any of the stipulations outlined in the document. Banks that choose to do business with the pot industry are required to essentially vouch for their clients and, if those clients are found to be running afoul of any of the guidelines, then the bank is considered complicit.

Some, according to Kelly, still operate on a cash-only basis. Some purchase pre-paid debit cards in order to conduct even the most basic transactions. Companies that own other businesses establish a subsidiary for their pot operations with innocuous sounding names, like “Joe’s Pie Shop” or some such, in order to open bank accounts that allow them to write checks and accept credit and debit cards.

“There is still a lot of concern,” she said. “They are concerned that, if they make too big a splash, it will draw the attention of the feds. So, they are trying to remain low key. We as an industry are still trying to work our way through this.”

But reform may not be soon. Just this week, Congressman Ed Perlmutter (D-Colo.), at a meeting of the House Financial Services Committee, offered an amendment that would have prevented federal authorities for punishing banks just for working with legal marijuana businesses.

In response, Perlmutter tweeted, “This week, I tried yet again to offer a solution to the marijuana banking crisis. Unfortunately, my amendment was not included in the final bill. This is an issue of public safety and I will continue to press the issue at every opportunity.”

“It is extremely hypocritical for a local bank to refuse to do business with us because we have applied for and been granted a license to open a retail medical marijuana business in downtown Basalt,” he said. “I wonder what percentage of the businesses in the Roaring Fork Valley are associated either directly or indirectly with the pot industry.

“What about employees of the various grow operations in the valley?” he said. “They deposit their paychecks. And there are many vendors that work with the marijuana industry. The local growers, they pay electric bills. Does Holy Cross Electric have issues with its bank? I don’t think so.”

But, as Kelly indicated, it’s up to each bank to feel comfortable with the legal veracity of its clients. Those banks are legally compelled to file regular reports with the feds. And if there are issues, the feds can very well rain hellfire down upon the offending bank and its employees.