It’s a high stakes game, and it starts with a call to the bank that might go something like this: “Hi, this is Herb Green. I own the Cannabis Club in Seattle and was just following up with you to establish a commercial account…”
Click. Dial tone.
Green looks at the growing pile of cash taking up residence in a Fort Knox brand, L-series safe sitting in the back office of his Cannabis Club and sighs. A new haircut reveals a swath of gray hair. It’s probably the result of the stress from running a popular and profitable cannabis business, stress that Green had not planned for. What to do with the cash?
In Washington, selling recreational and medicinal marijuana is legal, but banking the profits is almost impossible. This puts legal business owners like the fictitious Green in a position where they are forced to break the law as it pertains to paying taxes.
For the unaware, the IRS only accepts electronic payment from merchants for payroll taxes, and in order to make an electronic payment, a business owner must have a bank account. Since the U.S. Drug Enforcement Agency still considers marijuana commerce of any type a crime, many banks are unwilling to provide services to cannabis companies. This has created an impossible scenario for owners that want to pay their taxes and operate a legitimate business. Although merchants have been told that there are banks out there willing to work with cannabis companies, those banks aren’t advertising; it is left to the business owner to pound the streets like a Pokemon Go player to ‘find an egg’ — but in this case, the egg represents a bank willing to let the merchant open an account.
CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.