The current state of legal marijuana in the U.S. defies explanation. On the one hand, marijuana is still illegal under federal law. On the other hand, Washington continues taking actions that suggest it has all but given up on enforcing the law. So why not just get it over with and decriminalize already?
The latest inexplicable move is a U.S. Treasury Department proposal to start collecting financial data related to the marijuana industry. If the proposal is approved, the Treasury will start asking banks for information about any and all cannabis businesses they work with.
Treasury’s goal is to monitor and track cannabis industry financials in the same way it does for a multitude of other industries. The idea is to prevent money laundering through state-legal cannabis sales. How ironic that the government is looking at an industry that is federally illegal to discover illegal money laundering activities.
Accepting the Reality of Legal Marijuana
Proponents of the proposal say that the Treasury Department accepts the reality of legal marijuana. It does just that. Department officials recognize that thirty-eight states and the District of Columbia have given the green light to medical and/or recreational cannabis. They also know that their counterparts in the Justice Department are not going to enforce federal law.
Indeed, the proposal seems like a cynical acceptance of a reality lawmakers seem reluctant to change. But the proposal screams decriminalization. It reveals the duplicity of a Washington machine that wants it both ways.
Regardless of how you feel about legal marijuana, Washington’s current juxtaposition on the matter should be obvious. Asking for information about illegal activity in hopes of uncovering even more illegal activity reeks of hypocrisy. Should cannabis banking transactions reveal money laundering, will the government go after accused parties and include drug charges against them?
Banks Are Starting to Participate
If there is any good news here, it is the fact that banks and credit unions are now actively participating in the cannabis industry. According to data from late 2021, some 755 financial institutions have submitted reports indicating they are serving cannabis businesses.
An organization known as Utahmarijuana.org says banking involvement is big. Traditionally, cannabis has been a cash-only business due to a reluctance among banks to provide financial services. But as banks and credit unions get on board, cannabis businesses have an easier time moving beyond the cash-only model.
Granted, 755 institutions do not amount to much in the grand scheme of things, but it is a start. Washington lawmakers recognize that and are trying to come up with workable legislation that would encourage more banks and credit unions to get involved.
Financial Services for Cannabis Businesses
Financial institutions treating the cannabis industry just like any other would change things radically. For starters, cannabis businesses would have access to retail bank services and business loans. They would also be able to accept credit and debit card payments.
Accepting plastic would open additional doors all by itself. It would certainly make things easier on consumers, many of whom use cash infrequently. In addition, it would open the floodgates to online sales and home delivery – both of which are currently curtailed by the lack of electronic payment options.
As for the Treasury Department, they now wait to see how the White House responds to the proposal. Should that response be positive, the Treasury will still have to work through a public comment period before drafting a final rule.
Rule implementation will require financial institutions to track cannabis business financial transactions more closely. Money laundering concerns aside, the proposal offers compelling evidence that financial institutions will eventually treat cannabis businesses like any other.