News

Don't bogart that ATM.

May 14, 2013

You can bet that the ATM down the street from a cannabis shop is one busy machine. Because despite the legalization of marijuana in 18 states, it's still a cash-only business.

As far as the federal government is concerned, pot remains a controlled substance in all 50 states — even the 11 that allow its sale through dispensaries. As a result, any bank that knowingly does business with a state-sanctioned marijuana merchant is committing a federal offense.

This has created a financial dilemma for dispensaries, a recent Bloomberg report said. Essentially, the law forces pot shops into the ranks of the unbanked. They pay cash for licensing fees as well as taxes at the local, state and, ironically enough, federal level. And they accept cash only from customers.

Following the legalization of marijuana in Washington state in November 2012, Scott Jarvis, director of the state's Financial Institutions Department, took the banking issue to regulators at the FDIC and the Fed.

"The purpose was to let my federal counterparts know that we had passed the initiative, that the state was moving forward in fulfilling the will of the people and that when push comes to shove, money has to go somewhere into the banking system," Jarvis said. "And to alert them that at some point somebody will have to make some decisions."

Until that day, if you're going to a pot shop, bring your ATM card, because cannabis retailers don't take American Express — or even Visa.

But don't expect to find an ATM conveniently located on the premises.

Read more about regulatory issues.