US banks say no to legal pot money

US banks fear federal regulators and law enforcement authorities might punish them so they avoid opening accounts for marijuana business owners.

US banks are reluctant to provide services to marijuana business though 20 states and the District of Columbia have allowed either medical or recreational marijuana use.

According to The New York Times, the banks fear federal regulators and law enforcement authorities might punish them so they avoid opening accounts for marijuana business owners.

The use or sale of marijuana is still illegal in many US states. It is considered a Shedule I drug, according to the Controlled Substances Act enacted in 1970 and categorized as the most dangerous drug, along with heroin, LSD and ecstasy.

The Times says federal regulators can punish the banks for violating prohibitions on money-laundering, among other laws and regulations.

Å“Banking is the most urgent issue facing the legal cannabis industry today,” said Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C., according to the newspaper.

Smith said legal marijuana sales in the US could reach $3 billion this year, adding, Å“So much money floating around outside the banking system is not safe, and it is not in anyoneâ„¢s interest. Federal law needs to be harmonized with state laws.”

Marijuana business owners are now facing a cash problem as they collect thousands of dollars in bags. That has created security concerns for business owners.

Some Marijuana business owners open accounts by establishing holding companies with names that obscure the nature of their business, according to the newspaper. But the banks eventually shut down these accounts as soon as they find out the trick.

It is also usual for a legitimate marijuana business to go through a half-dozen bank accounts in a few years, just to keep legal marijuana money safe in the banks, the paper says.

Todd Pietzsch, a spokesman for the largest credit union in Washington State, BECU, said about 20 accounts have been shut down in the last three years after it was discovered they were for businesses in the legal marijuana trade.

ARA/ARA

Source: Press TV