When Colorado became the first state to legalize recreational marijuana in 2012, the plant was (and continues to be) illegal at the federal level. Yet several Colorado banks jumped in, quickly opening accounts. Many of those banks were promptly swarmed with U.S. Drug Enforcement Agents. Everyone from tellers to bank presidents were warned that by servicing the cannabis industry, they could be arrested and held criminally liable under federal law. Most banks quickly backed away.
“It was very intimidating,” remembered Jenifer Waller, president of the Colorado Bankers Association. “They basically were being asked, ‘Do you think you’d look good in orange?’”
There were a few small banks that wanted to enter the business, however, “who really led the path on how to do it,” Waller said. These bankers had lived alongside their customers for decades, and saw no reason not to service their pursuit of a newly legalized business line. They worked with state and federal bank regulators, who were navigating oversight somewhat in the dark to establish the steps banks needed to comply with FinCEN guidance.
Since the November elections, 35 states and the District of Columbia have legalized either medicinal or adult-use marijuana, and interest in cannabis banking is increasing. And while the risks are better understood, Congress has yet to act on a proposal to provide bankers who service the industry a safe harbor. Still, bankers are increasingly looking at cannabis as a legitimate industry — and a business opportunity.
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