Accounts That Go Up in Smoke: To Bank or Not to Bank, the Marijuana Industry
Litigation attorney Adrian Snead discusses why cannabis businesses may seem like too big of a risk for banks. He explains that even though marijuana is legal in 33 states, it remains a Schedule I drug and is considered illegal under federal law. Individuals and businesses that provide services to the marijuana industry, including attorneys, accountants, utility companies, real estate owners, plumbers and others, are referred to as ancillary businesses. Touch-the-plant and ancillary businesses are all considered marijuana-related businesses (MRBs).
Federal prohibition of marijuana affects all MRBs. Any contact with money that can be traced back to MRBs, no matter how ancillary, could be considered laundered and, therefore, at risk of seizure. Banking institutions serving the industry risk losing their master account with the Federal Reserve and could face additional scrutiny. For most banks, the risk of working with the marijuana industry is simply too high.