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Because most banks will not provide lending to dispensaries due to federal laws against marijuana, Allen St. Pierre (executive director of the National Organization for the Reform of Marijuana Laws) said the roughly 4,000 "cannabusinesses" in the U.S. are forced to deal with university credit unions, "sketchy" regional banks that "go down on almost any given weekend," or worse.
"Some of these folks must have the biggest mason jar collection you can imagine. They must have Tupperware stuffed to the brim with cash," he said. "The banks are leaving hundreds of millions of dollars a year in fees [on the table]."
The conflicting laws that limit banks' ability to access this segment of the retail market are ones that several lawmakers hope to change, including 15 members of Congress who on May 20 submitted a letter to Treasury Secretary Timothy Geithner asking for formal, written guidance that assures banks will not be prosecuted for doing business with medical marijuana facilities.
As much as the pending legislation would open up opportunities for banks, the Woods said that a ballot in November to legalize marijuana for recreational use in California would also mean a huge boom to business for the insurance market.
"If that is passed, I think that is going to change the dynamics of this industry forever," J.B. Woods said. "It's going to cause more and more people who have been on the fence to actually jump into this business."
