Banks turn their backs on Medical Marijuana Dispensaries

No thanks, never touch the stuff!

If you own a medical marijuana dispensary, you might have trouble finding a bank you can do business with in Colorado. Dispensary owners are reporting that Wells Fargo & Co is virtually the only bank in Colorado willing to take their business. Now, it seems that even they have turned their backs on the dispensary industry. Cristie Brumm, a spokeswoman for the banking giant said that Wells Fargo is examining state and federal laws to determine what the bank’s risk is in working with dispensaries. For now, Wells Fargo has stopped opening new accounts for dispensaries. Their move, according to the Denver Post, reflects a broader uneasiness among banks in the state about working with the medical marijuana industry. Ryan Vincent who owns a dispensary in Denver worries that the dispensaries might lose a key ally in their business plans. he says that every dispensary he knows uses Wells Fargo as it’s bank, mostly because banks have turned a cold shoulder to the the dispensary industry .

Tim Powers, a spokesman for the Colorado Bankers Association agrees that it is unusual for financial institutions to turn away potential customers, but he said legal and regulatory considerations have made many banks uncomfortable working with dispensaries. Federal law requires that banks not do business with companies operating illegally. Even though Colorado recognizes the use of medical marijuana, it is still illegal to possess, cultivate or sell marijuana, and banks are worried that their closely regulated industry might be breaking some law. Regulators have only said to use caution, and the banks are now being overly cautious. This move by Wells Fargo could deprive dispensaries of needed stability, possibly forcing them to operate in shadowy, cash-heavy ways.  A difficult proposition for dispensaries trying  to operate a legitimate-about board business.

Denver’s city council recently passed new requirements for dispensary owners to pass criminal background checks, provide floor plans and burglar alarm permits, fingerprinting and huge increases in fees. Denver will begin accepting applications for any new dispensaries starting Feb 9th. You will need to include a $2,000 application fee if you want to turn one of those in, and an additional $3,000 renewal fee if you are renewing. The new rules in Denver are scheduled to take effect on March 1st. With new businesses trying to get their foot in the door, not being able to do “banking” seems like a rather large hurdle to cross. Maybe it is is time the dispensaries rallied together and started their own credit union.