Banks shutting out medical marijuana dispensaries

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Medical marijuana dispensaries are bringing in a lot of cash nowadays but are having a tough time finding any place to put it.

That’s because many of the financial institutions doing business in Colorado Springs and elsewhere in Colorado have decided not to do business with the dispensaries.

K.C. Stark, who owns Go Green Cross in downtown, said he’s already had to move his business accounts from two banks.

“Who knows what’s going on? One week, it’s fine to do business with them, the next week it isn’t,” he said. “It’s unprecedented.”

Stark said he feels the banks are discriminating against medical marijuana providers.

“It’s a constant struggle,” he said. “We’ve tried Wells Fargo; we’ve tried the Bank of Broadmoor.”

Not only are they rejecting new account applications, but the banks are also closing the accounts of any customers whom they discover are in the medical marijuana business.

“We’re a nationally chartered bank, and we have to follow federal laws,” explained Steve Helbing, southern Colorado regional president of Wells Fargo, one of the largest banks doing business in the region. “Our attorneys believe this is the best way to follow banking laws and regulations.”

The Bank of Broadmoor declined to discuss its policy, citing the sensitive nature of the issue.

Actually, there are no specific laws barring banks from opening accounts for dispensary owners.

But banks are worried about their image, and they worry that doing business with operations that some in society still view as illicit could hurt their reputations.

Wells Fargo is taking the same approach in all 14 states that have legalized medicinal marijuana, Helbing said.

“It’s still illegal on the federal level, so we have to be careful,” he said. “We will be closing down any accounts that we know are medical marijuana businesses.”

Paradoxically, before it took a closer look at the legal issues, Wells Fargo was once known as the pot-friendly bank, according to online blogs that serve as information hubs for the medical marijuana industry.

Chase bank has also denied accounts to medical marijuana businesses, citing “financial operational and compliance risk.”

Credit unions are following the banks’ lead.

“We are a federally chartered and insured credit union,” said Cathy Grossman, vice president of corporate communications for Ent Federal Credit Union. “We do not allow these types of accounts because we have to adhere to federal law — and marijuana is still illegal at the federal level.”

It’s a problem in every state that has legalized marijuana, and some lawmakers in Congress are now trying to help.

In a recent letter, these legislators asked Timothy Geithner, secretary of the Department of the Treasury, to formally issue a policy “assuring that department priorities do not include targeting or pursing institutions whose account holders are involved in a business ostensibly operating in compliance with a state medical marijuana law.”

Rep. Jared Polis, D-Boulder, signed the letter, as did seven other members of Congress.

Polis said the banks’ stance don’t serve the public interest.

“The effects of this denial of service include an increased risk to public safety with potential theft or robbery that any cash-only or cash-reliant business faces; a decreased likelihood that medical marijuana vendors will have the ability to accurately account for tax liability; and an affront to fundamental fairness, since forcing businesses to operate with cash exposes the owners to greater legal risk,” the letter said.

Polis’s office said the representative had not heard back from Geithner.

The Colorado Bankers Association, meanwhile, has asked for advice from both state and federal regulators — but hasn’t heard back from them, either. Spokesman Tim Powers isn’t surprised by the banks’ caution.

“Current bank regulations require us to broadly know what type of business our customers are operating in, and determine that the business is not blatantly operating an illegal business, or engaging in illegal activity,” he said. “With regard to medical marijuana dispensaries, unfortunately the banks are caught between conflicting state and federal laws — one saying this action is legal and another saying it is not.”

Powers said individual banks have also approached regulators about the medical marijuana issue, but received only vague — and sometimes conflicting — guidance.

“Some have been told to be ‘very cautious’ and warned of potential compliance issues with current regulations, while recently others have unofficially been told to not open these accounts until rules and guidance has been established,” he said.

Given the absence of regulations at both the state and the federal level, the banks are taking what they feel is the safest route.

Steve Strunk, banking commissioner for the state of Colorado, said his office cannot act until lawmakers adopt some sort of legislation.

“The state legislature hasn’t passed any laws regarding banking regulations for this industry, or any other industry,” he said. “We can’t invent regulation that doesn’t exist at the state level. Banks are private businesses, and they can decide what customers to accept and which ones not to accept.”

Strunk said in his days as a banker in Las Vegas, the bank where he worked refused to open accounts for certain types of businesses, even though those businesses were legal in Nevada.

“Banks operate on their reputation,” he said. “And they’ve gotten beaten up by the media, so there’s little wonder that they’re cautious.”

That’s a point underscored by the Office for the Comptroller of the Currency, which regulates national banks.

“There’s no banking law that covers medical marijuana dispensaries,” said Kevin Mukei, spokesman for the OCC. “Banks can choose what to do. But they have to make sure they are following federal law — and where federal law and state law conflict, there could be a problem.”

The banks say they are left with little choice.

“I had a lady call to complain we wouldn’t open an account for her medical marijuana business,” Helbing said. “She said she had friends in the same business with accounts here. I told her to give me their names, and we would close their accounts. It’s something we’re being very serious about.”

Stark knows that all too well; he is still looking for a bank that will take his business.

Rob Larimer contributed to this story.

21 Responses to Banks shutting out medical marijuana dispensaries

  1. Here we go. After decades of being criminalized now the business owners of dispensaries WANT to be legitimate and nobody will LET them. What bothers me most about the article is this comment:
    “But banks are worried about their image, and they worry that doing business with operations that some in society still view as illicit could hurt their reputations.” Also this comment: “Banks operate on their reputation,” he said. “And they’ve gotten beaten up by the media, so there’s little wonder that they’re cautious.”
    As far as some of the reasons stated by banks such as the “risky” cash and carry business, what if the dispensary has a credit card machine. Now it is a cash, charge business. I can’t see any more risk than a liquor store or pharmacy accepting cash for their products. This is just another “personal agenda” move brought forth by anti-MMJ activists.
    My good friend runs a dispensary and desperately WANTS to be completely legitimate in the eyes of the community. He turns people away that are not “legitimate” MMJ registered users and will turn people away if they don’t have a viable doctor recommend the MMJ. So, why is he being penalized? Because of the anti-marijuana activists. I bet 95% of them drink alcohol and would scream bloody murder if somebody tried to take that away. Is this the best we can do. Banks, you should be so ashamed of yourselves. CSBJ, what side are you on? Pro-business or Pro-prohibition. Look at all the jobs, revenue and economic help this burgeoning industry can offer. Ok. Let’s see who is first to throw out the “you’re just a stoner” card.

    July 16, 2010 at 1:51 pm

  2. Another thing: This poll that is to the right needs one more choice: “We already voted. regulate, tax and leave it alone already.” If the CSBJ does not have a personal agenda then that should be an option for the folks that are sick to death of this ongoing, political waste of time.

    July 16, 2010 at 1:53 pm

  3. Banks have the right to do business with who they want. If they don’t want to do business with MMJ dispensaries because they fear it will damage their image then that is their prerogative. I’m confident that some small bank will see this as an opportunity and welcome MMJ Dispensaries with open arms and make a killing.

    July 16, 2010 at 3:55 pm

  4. I suppose it could work the other way too. All Colorado Medical MJ patients could take their accounts to banks that do business with MMJ Dispensaries. My bank is Wells Fargo and I don’t want to “tarnish their reputation” ya know… I need to close my accounts now. =)

    So where is this “small bank” that wants our accounts?

    have myelin
    July 16, 2010 at 4:37 pm

  5. So the premise is it violates Federal law so it should be shunned. The libertarian in me says wait a minute…if the banks were rejecting the Catholic church based on the Bishop’s vocal embrace for illegal immigrants, sanctuary, and strong support and actions reflecting direct violation of federal immigration laws, then I’d say yes – tut tut dispensaries. But, neither of these banks are refusing Catholic church money, so I’d say they’ve selectively chosen to apply a standard. Good luck to the Dispensaries and a fair hearing on that though.

    July 16, 2010 at 4:59 pm

  6. Sorry dopers, the law is the law. I hope the mmj shops are closed down and soon!

    July 17, 2010 at 7:47 pm

  7. I have somewhere they can invest their money and receive a return banks would only dream about.

    Jordan M Snyder CEO CASA
    July 19, 2010 at 1:02 am

  8. If you, or somebody you know, is running a dispensary and is currently having issues with their bank/credit union or cannot find one that will support their business then please take a look at (yes, we are a Colorado company). We are not only a point of sale system, but an entire dispensary management system as well. As for a mmj-friendly bank check out Core First Bank and Trust. They’re Kansas based, but have several braches in the Denver area. So, they might be a possibility.

    Ryan B
    July 19, 2010 at 1:12 pm

  9. Brian,
    What? Let me read your post again and see if it makes sense. Nope. Still not able to distinguish where your argument went.

    First, loved the “dopers” comment. That is the first knee jerk reaction from uneducated (about mmj) anti-mmj folks. Glad to see you are keeping with the name calling. You said and I quote “The law is the law”. You are right. People’s right to MMJ is the law written into our Constitution and voted on by all of us. There is NO law that says banks can be discriminating against MMJ dispensaries. They (Dispensaries) are trying to be compliant with ALL of the laws and regulations set forth by our State Government. When you indicate you want the MMJ shops closed down and soon are you advocating the mmj be sold on the street, in dark alleys by thugs who will pay no tax and reap the high profits? That is the only way it will be sold then. We know MMJ is not going away ever so you must be against patients who need it having a safe, friendly and secure environment in which to obtain it. Better that old lady with cancer get it from a guy carrying a gun or a knife huh?

    July 19, 2010 at 1:14 pm

  10. Our congressmen are draging their collective feet on this issue. So therefore we need to vote them all out in November. Also all mmj patients should close their Well Fargo accounts and other banks with no backbone. Our numbers are greater than they think. Lets speek to them in numbers in November. All anti-mmj folks should read up on mj as it could save theirs or their loved ones life some day. Get real people!!!

    July 19, 2010 at 3:44 pm

  11. Dopers? Educate yourself. I don’t get my medical mj from a dispensary because I can’t afford to buy it. I am on Medicaid My caregiver grows it for me free because gee whiz…he’s a nice guy.

    I wonder how many Vicoden “Dopers” would freely give their stash away to those in need.

    Have Myelin
    July 19, 2010 at 3:57 pm

  12. Who knew that the banks who willfully defrauded homeowners and investors at taxpayers expense were soooo sensitive.

    July 19, 2010 at 8:17 pm

  13. Well, I guess the banks felt like their reputations were too marred from the sub-prime debacle. All of a sudden they care about what the general public thinks? I notice “Brian” has not come back on the post. I bet he read the comments but true haters don’t want to reason. They just want to hate. Have another beer Brian, and feel good you missed Prohibition.

    July 20, 2010 at 11:01 am

  14. Rob you say stop the hate and then you attack someone personally. Do you see the hypocrisy there?

    Banks don’t have to do business with MMJ dispensaries. Just as customers have the right to choose not to do business with a certain bank. And banks have a legitimate concern about federal law. Especially banks that are nationwide like Wells Fargo.

    Lastly many banking institutions require drug tests to be employed there. And even if someone has a valid MMJ card to purchase medical marijuana, they can still be fired from their job if they fail a drug test and it’s legal. Now if Wells Fargo requires it employees to pass a drug test to be employed there, it would be hypocritical of them to turn around and do business with MMJ dispensaries.

    July 20, 2010 at 11:55 am

  15. Hyrum,
    Just tired of the “hate” comments like “you dopers” or “you stoners” from the anti-mj folks. These are the same people that, for the most part drink alcohol and most likely take the prescription drugs that are way more harmful than mj. I do not mind people voicing their opinions as everybody has a right to do so but the name calling is just juvenile. I am finding more and more people out there that have NEVER tried mj but feel this whole issue is so out of control in terms of the legislation attempts. These same people encourage legalizing it because there is NO proof of the “gateway” theory, the “addiction” theory, and the revenue and creation of jobs is far more important than fighting tired, old “reefer madness” battles. Once everybody realizes that the “weed” that has been feared for so long is actually far safer than alcohol, prescription drugs (side effects) and tobacco I firmly believe this pro vs. anti would lessen exponentially. MJ users are CEOs, CFO’s, soccer moms, cancer patients, chronic pain patients, hockey coaches, and overall ordinary citizens. I have seen people drive up to dispensaries in BMWs, wearing suits and ties, and buy their MMJ. The ONLY reason I kind of came down on “Brian” was his extremely narrow-minded comment: Sorry dopers. The law is the law.” Really? What LAW are the banks following? None. They are creating a policy not imparted or enforced by law enforcement.

    July 22, 2010 at 11:19 am

  16. Thank you Rob.

    I have MS and two of the commonly prescribed anti-spasticity drugs are baclofen and zanaflex. I have taken them and the side effects are horrendous. They make me hallucinate or feel so “high” I can’t stand myself. Medical MJ has helped me more than you can imagine.

    I suppose Hyrum would rather I take medications with side effects I cannot tolerate and against the advice of my own MD? And don’t forget this one factor….my caregiver is not in it for the money. I get it free.

    You would not know I was a medical MJ patient if you met me on the street.

    Have Myelin
    July 22, 2010 at 12:50 pm

  17. I am certain there are many people out there with a legitimate reasons for taking or needing medical marijuana. I am certain there are MMJ dispensaries who do their best to run a legitimate business and do their best to abide by the law. I’m also certain that there are many individuals who are just looking to get high and that there are MMJ Dispensaries willing to sell to them too. It also worries me when MMJ dispensaries try to open up across the street from a high school or are run out of the back of a van.

    But the point of the article is that banks of leery of working with them and they legitimate reasons to be. As I posted earlier, I’m sure a bank will come along and say bring your business here and MMJ dispensaries will go there. Businesses can use discretion.

    July 22, 2010 at 3:04 pm

  18. Have Myelin,
    No worries. The folks that are anti need to also understand that the pro-mmj deserve their say without the name calling. My father is a quadruple bypass patient, has had strokes, is type 2 diabetic, and the artificial knee he was given a year ago just causes him so much pain it is unbearable. Perfect candidate but anti-mmj would rather have him keep taking the multitudes of prescription drugs that will most likely kill him in the end. As I said before, if you drink, smoke or take prescription drugs then you are on the same plane as MMJ users. The others just happen to be legal now but MMJ will prevail in the end.

    July 23, 2010 at 7:51 am

  19. But Hyrum, you resorted to calling us “stoners” or “dopers”.

    And I am very certain there are drug addicts on LEGAL prescriptions living across the street from some high schools in Colorado Springs, lol. Should we freak out?

    Working out of the back of a van??? Where do you get your information???? Where are these “vans?” Are they the handicap-accessible vans used to transport those who are WC-bound or too ill to drive themselves to dispensaries?

    And have you thought that perhaps instead of teaching kids to fear “reefer madness” that maybe we should educate them on the medicinal properties of MEDICAL MJ? I have children. Aspirin comes from the bark of a tree. Why is it so difficult to imagine another painkiller might be found from another plant?

    My son pays no attention to what I am doing and he’s now an adult. After all…it’s “mom’s medicine”, not pot.

    Have Myelin
    July 23, 2010 at 9:35 am

  20. Have Myelin,

    I re-read my posts. I haven’t used the words or referred to someone as a stoner or doper or anything of the sort. I have literally seen a van marked as MMJ selling out the back of it to people who were not wheel chair bound. I would be concerned about a van marked as a pharmacy selling vicodin out the back too. I simply said that not all MMJ dispensaries and people who use them are on the level.

    July 23, 2010 at 12:06 pm

  21. How do you know not all MMJ dispensaries are not on the level? Are you a customer?

    I do agree with you that there are doctors a bit overzealous with their recommendations to get their license. THAT is where the problem lies. Not with the dispensaries. That is a problem the American Medical Assocation or whatever needs to address.

    The alcohol industry gets 80% of its income from people with drinking problems per the LA Times. Also…. another fact I think worth pointing out…. Medical MJ use (or even ‘pot’) is rarely associated with ER visits, unlike DRUGS…legal, or not, and that includes alcohol.


    Maybe Wells Fargo needs to refuse accounts from places that sell alcohol and legal drugs. After all, between the two, they kill more people than pot….lol

    I think the whole thing is funny since banks like money.

    Have Myelin
    July 23, 2010 at 1:43 pm