Written by Associated Press
(AP) – Regulations and paperwork are driving up costs for financial institutions serving marijuana companies doing business in states with legal pot sales, a cannabis banker told a conference in Las Vegas.
Sundie Seefried told hundreds of cannabis trade show attendees at MJBizCon last week that a subsidiary of her Colorado credit union had to file more than 7,000 reports with regulators on behalf of 220 cannabis-related member companies.
She compared that with 226 reports required for 33,000 regular members of her Partner Colorado Credit Union.
“When you ask me why banking is expensive – what you are really paying for are all the bodies it takes to file 7,000 reports,” she said.
Banking was again a key topic during the three-day trade show that drew more than 26,000 people to the Las Vegas Convention Center, the Las Vegas Review-Journal reported . The conference ended Friday.
Medical marijuana sales are legal in 33 states and recreational sales in 10.
But sales are still prohibited under federal law, creating roadblocks to serving cannabis companies that go beyond filling out thousands of forms for regulators.
Marijuana businesses unable to open checking or savings accounts in most financial institutions may have to pay cash to employees and suppliers.
Seefried said federal and state regulators have carried out nine joint inspections of her credit union over the past three and a half years, compared with the industry standard of three.
“They will send 20-plus examiners into our small credit union to make sure we are not violating the Bank Secrecy Act. That is a show-stopper for a lot of banks and credit unions,” she said.
Riana Durrett, executive director of Nevada Dispensary Association, estimated that at least half of Nevada cannabis companies don’t have banking relationships. That requires them to spend a lot on security, she said.
Reef Dispensaries, which has operations in Las Vegas and around Reno, is among many Nevada businesses that have struggled to find a long-term banking relationship, said Brett Scolari, general counsel of Tryke Cos., which owns the dispensary.
Seefried said that even if federal laws change soon, the cannabis industry will remain a cash business for years to come, similar to alcohol and casino businesses.
When asked if banks would accept cryptocurrencies from cannabis companies, Seefried said that would only add to the regulatory pressure on banks.
“I will tell you what my regulators told me,” she said: ‘Cannabis is a very big risk for you right now; don’t add cryptocurrencies.'”