A sign hangs over the door of a vacant building in which a credit union was going to be established to cater to the needs of the marijuana industry on Friday, July 31, 2015, in downtown Denver. A pair of lawsuits filed in Denver this week challenge recent decisions by the U.S. Federal Reserve and the National Credit Union Administration to deny applications from Fourth Corner Credit Union.(Photo: David Zalubowski, AP)
In today’s technologically advanced society, where financial transactions rarely leave the realm of touch screens, the state and businesspeople hoping to break into the lucrative medical marijuana business are preparing for a quaint relic from the past: cash.
Lots of cash.
The conflict between state and federal law has set up a banking conundrum for the medical pot industry. Medical marijuana is legal in 29 states, including Michigan, but it is still considered an illegal controlled substance by the federal government.
Banks are leery of doing business with marijuana entrepreneurs because it could violate their federal charters, said Elizabeth Khalil, a partner at the Dykema law firm in Chicago and leader of the firm’s financial regulatory practice, which includes advising clients in the medical marijuana industry.
“The marijuana business is a cash-based business,” she said. “Even where it’s perfectly legal under state law, because it’s illegal in federal law, it’s very challenging to obtain traditional banking services.”
So in Michigan, where state regulators are still trying to sort out the rules that will govern the industry, preparations are under way to accept boatloads, bagfuls and briefcases stuffed with cash when the applications for licenses are made available for the first time on Dec. 15.