Roberts_RobinRecently, financial institutions and marijuana-related businesses received important new information from the federal government. The guidance should remove some obstacles that restrict access to banking services for these businesses.

While the new direction has been applauded by many in the marijuana industry, many in the banking community continue to express reservations that the new guidance just doesn’t go far enough to limit their liability.

With 20 states and the District of Columbia now having legalized marijuana activity, it’s simply a matter of time before Congress addresses the banking needs of these legal businesses. In the meantime, the new guidance serves as the pathway for financial institutions to start offering services to dispensaries and marijuana-related businesses.

In my opinion, some enterprising banks will step out on the marijuana ledge in the near future. But no one should fool themselves into thinking this guidance is easy to implement — nor is it going to come without a cost to both the financial institutions and the customers who fall under its purview.

At the heart of the guidance lies the memorandum issued by the U.S. Department of Justice (DOJ) Deputy Attorney General, James M. Cole. This memorandum, dated Aug. 29, 2013 and known as the Cole Memo, directs DOJ attorneys and law enforcement to focus their enforcement efforts on the “Cole Memo Priorities.” These priorities are very specific and include preventing distribution of marijuana to minors, preventing diversion of marijuana from states where it is legal under state law in some form to other states, and preventing state-authorized marijuana activity from being used as a cover or pretext for drug trafficking or other illegal activity.

These Cole Memo Priorities are important for banks to understand as they drive all subsequent guidance and monitoring requirements.

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Those monitoring requirements are no joke, folks! If, for example, a dentist wants to open a business account, he/she must present evidence of being authorized to open that account on behalf of the business entity, that the business entity is duly registered at the state level, and that it has an IRS-issued Employer ID Number. Once the dentist opens the account, the bank must report cash transactions that exceed certain thresholds and meet the contractual and regulatory requirements of the deposit agreement.

If a bank wishes to enter into a depository agreement with a marijuana-related business, the due diligence requirements increase. The bank is responsible for researching the licensing history of the business and developing a detailed understanding of the business and its customer base. Ongoing monitoring of public information about the business is required as well as continued review of financial records to ensure it is not engaged in any activity that runs contrary to the Cole Memo Priorities or violates state law. This type of financial analysis of a deposit customer is highly unusual and labor-intensive.

So why should the community care if marijuana-related businesses have access to the banking system? One reason is just to the south of us — Pueblo.

Pueblo County was the first to release its sales tax numbers from January’s retail marijuana sales: $1 million of revenue was generated between two retailers in a month. Assuming most, if not all, of that million was cash, where is it being kept? It is a fact that businesses with large amounts of cash on hand are a magnet for crime, as we in the banking industry know well.

Another reason is simple fairness. Other legal businesses in Colorado are required by the IRS to deposit their revenues into a bank account bearing the same name as their business entity, report their income and expenses to the IRS annually, and the IRS (as part of the Department of the Treasury, which also regulates banks) receives additional help in monitoring those business accounts by the banks themselves through the Bank Secrecy Act. If one legal business is subject to this monitoring, all legal businesses should be subject to the monitoring.

The voters of the state of Colorado have made the sale of both medical and retail marijuana legal. Regardless of personal feelings, this now comes down to a matter of business.

Marijuana-related businesses in states where they are legal should have access to the same banking system as other legal businesses. Furthermore, Congress should take the additional step to provide a safe harbor for banks operating in the states where marijuana-related businesses are legal.

The additional safe harbor most likely would not make the guidance for accepting these accounts less onerous, but it would assuage the fears of nervous bankers, should the political winds change regarding federal enforcement of marijuana laws.

Robin Roberts, president of Pikes Peak National Bank, also has been heavily involved with the local small-business scene.


  1. Stop doing business with banks and this becomes a non-issue. There many on line options becoming available like Bitcoin, PayPal and Dwolla. It is time we stop allowing banks and insurance companies to dictate how we will do business.

  2. Hey Robin,

    Well written article. New challenges now in Colorado. We are in Hawaii and people are asking us what we think of the marijuana legalization in Colorado.

    Hope to see you soon.
    Nancy Kelly

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