Recreational Marijuana Legal in California Soon, Banks Will Not Touch Cash
Marijuana will likely be a thriving business in California next year, with expected revenue of $5.2-B, but there few banks will take its cash.
The recreational use of Marijuana becomes legal on New Year’s Day, and the California itself will collect a much needed $1-B in taxes from the sales.
But, hang on, banking and financial services for the growing industry are generally unavailable, and federally illegal.
The federal stance is that Cannabis is categorized along with substances like LSD and Heroin, and banks risk losing their federal charter if they work with Cannabis companies.
For now, many Marijuana businesses have to operate in cash-only mode, relying on safes, video camera systems, security guards and armored car pickups.
Some operators simply hide the nature of their business from banks, while others turned to Bitcoin, which have questionable ability to pass regulatory scrutiny because they are so complex and their lack of transparency remains a major stumbling block.
But, President Donald Trump’s aim to roll back banking regulations may ultimately make Cannabis banking easier.
The Sarbanes Oxley Act, created to, among other things, reduce accounting fraud by asking company executives to certify their financial reports as accurate, may be part of the rollback.
Have a terrific week.