With California set to legalize cannabis for recreational use in January, it might seem that running a marijuana business would be a surefire success – “money in the bank,” as the saying goes.
The basic difficulty is this: Because marijuana is still considered an illegal substance under federal law and banks are federally regulated, many large financial institutions won’t provide services to cannabis businesses. Meanwhile, those firms that do handle pot-related banking needs often charge an exorbitant amount to cope with the cumbersome paperwork and oversight that the feds require – as much as $5,000 to $7,000 a month for growers and dispensaries.
The result is that a mere 30 to 40 percent of cannabis businesses around the country have bank accounts, according to a survey in late 2015 by Marijuana Business Daily. That leaves 60 to 70 percent to deal strictly in cash – an extremely dangerous proposition, especially in certain neighborhoods.