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Voters in Washington and Colorado just approved measures legalizing marijuana for recreational use. But businesses that want to sell marijuana in those states will face a problem: No bank wants to do business with them.
I called several banks in Washington. I called a local credit union, a tiny bank in the San Juan islands. Everybody said basically the same thing. Even if selling marijuana is legal under state law, it's still illegal under federal law. And banks and credit unions worry that this could get them in trouble.
So people who want to go into the marijuana business — who want to legally grow, distribute, sell marijuana in the state — are going to have to operate, basically, like drug dealers. They're going to have to run a cash business.
John Davis has been through the problem that future marijuana businesses are going to have. He sells medical marijuana in Seattle (medical marijuana has been legal Washington). And he had a really hard time finding a bank willing to work with him, so for a while he did business in cash.
Payroll was a mess. It's impossible to order supplies — baggies, lights, display cases — without a credit card. PayPal works for some things, but not for others.
"How do you pay your taxes?" Davis says. "You can't go into the Department of Revenue and give them a wad of cash."
Davis learned a bunch of tricks for operating an all cash business, and even teaches a course called "canibusiness."
In the end, Davis found a work-around that may be he best option for other people who want to get into the industry: Be vague with the bank. Don't tell them exactly what line of work you're in.
Davis says he doesn't feel great about toying with the truth. But, he says, he has a legitimate business, and he needs a bank.