Eight months after the Federal Justice Department and Treasury Department announced new guidelines allowing banks to work with marijuana businesses, some of the credit unions in New Mexico sent letters to close to half of the State’s licensed medical marijuana producers saying they will no longer accept their business and proceeded with closing their accounts. The credit unions assert that they are unable to comply with federal guidelines for servicing the accounts. This move leaves producers in the lurch, with either having to operate on a cash only basis or scramble to find another financial institution willing to take their business. In February 2014, the Obama Administration announced new guidelines that will allow banks to legally provide financial services to state-licensed marijuana businesses. Twenty-three states and Washington D.C. have legalized marijuana for medical use; two of those states (Colorado and Washington) recently legalized marijuana like alcohol.
“It is disappointing to see that the banking industry in New Mexico is failing to protect medical patients and small businesses in light of the assurances the federal administration has provided and a robust and thriving medical marijuana industry in the state,” said Emily Kaltenbach, state director of the Drug Policy Alliance. “This abrupt move has all of us asking why they are unexpectedly ceasing to do business with the marijuana industry in New Mexico. We would like to know why they are unable to comply with the federal guidelines.”
Many banks have been afraid to open checking or savings accounts for legalized marijuana businesses out of fear of breaking federal law. As a result these businesses are forced to deal with large amounts of cash potentially creating a public safety risk for the industry.
“Even though the federal government is OK with banks and credit unions taking cannabis business deposits, they are not doing it in New Mexico,” stated Len Goodman, the executive director of NewMexicann who received a letter from the State Employees Credit Union (SECU) dropping their account. “We will not know for a few days or weeks whether we can find a work around with other kinds of financial institutions or not. In the meantime starting this Wednesday, all transactions will be cash only.”
The licensed producers who have received letters are having trouble finding other financial institutions in the state willing to take their business.
William Ford, executive director of R. Greenleaf Organics also received a letter from SECU indicating their business account would be closed. Ford expressed his concern that while Wells Fargo does the banking for the New Mexico Department of Health and the state’s medical cannabis program, and undoubtedly makes a profit from that business, they are unwilling to do business with the producers. “A bank that does business with our state and profits from that business, should be expected to follow our state laws and provide services to all law abiding entities in the state. If they don’t agree with the laws of our state then they shouldn’t be our bank,” stated Ford.
Last February, in a joint statement, the U.S. Department of Justice and the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury, said the new guidelines give “greater financial transparency” to an industry that remains illegal in nearly every state. It also makes clear that banks would be helping law enforcement with “information that is particularly valuable” in filing regular reports that offer insights about how marijuana businesses work.
The Drug Policy Alliance (DPA) is the nation’s leading organization of people who believe the war on drugs is doing more harm than good. DPA works for drug policies based on science, compassion, health and human rights.