Although Arizona and many other states have passed laws allowing the use of medical marijuana, the federal government does not recognize states’ authority to legalize marijuana under any circumstances making the growing or distribution of medical marijuana a felony under federal law. The feds have targeted medical marijuana businesses for violations of the Controlled Substances Act, a 40-year-old law that classifies medical marijuana as a Schedule 1 narcotic – the equivalent of heroin or LSD – meaning it is considered addictive and with no medical value.
The federal government’s position is puzzling for many, especially at a time when the country needs to create jobs and encourage the growth of small businesses. And particularly in light of findings by the financial-analysis firm See Change Strategy that the medical marijuana business would be worth $1.7 billion in 2011 and was growing.
One would assume that banks must be involved with such a huge amount of money flowing through these businesses. However, because the medical marijuana business is banned by the federal government, any bank or credit union doing business with a medical marijuana dispensary, even by simply allowing them a bank account, is subject to potential money-laundering charges – the same class of charges that apply to criminal activities such as human-trafficking, arms smuggling and prostitution.
The U.S. Drug Enforcement Administration (DEA) began warning banks and credit card companies away from medical marijuana businesses years ago, and many have responded by closing the businesses’ accounts.
As a result, owners of legitimately licensed and highly profitable medical marijuana businesses find themselves without access to the banking system, creating unnecessary challenges and expenses for the industry. Cash-only businesses not only face serious security risks, but also the logistical challenges of how to pay employees and suppliers.
A possible solution to the medical marijuana industry’s banking crisis is in sight thanks to a bi-partisan coalition of United States lawmakers who have introduced multiple measures in Congress for reforming federal marijuana laws.