Right as California became a fully-legal cannabis state, right as support for marijuana reached an all-time high and right as banks should be more confident, Jeff Sessions rescinded the Obama-era Cole memo.
The Cole memo was a protection, even if a slightly shaky one, for compliant cannabis companies and the banks that chose to work with them. Now, with the Cole memo no longer there, many banks that were on the brink of opening their doors to cannabis companies have shied away.
Without the Cole memo in place and with marijuana still clocking in federally as a dangerous Schedule I drug, the Financial Crimes Enforcement Network, or FinCEN, can no longer advise banks to do business with the pot industry, putting the flourishing market and those who run it at risk.
California already operated on a mostly cash basis. Their medical marijuana program racked in approximately $2.7 billion dollars a year already, and is expected to nearly double with the legal market. Having an all-cash business is an enormous risk and as reported by CNBC, insiders are saying that if you weren’t already in the industry, now is probably not the time to join. A discouraging stance, especially with the newly taxed and regulated landscape.
All-cash businesses face many problems, especially the most obvious: There’s no safe place to store your earnings. Transporting massive amounts of cash from your business to your home, back to your business for payroll, to the tax collectors is dangerous. Popular opinion of the plant has never been higher and with 30 states plus the District of Columbia having passed some sort of legalization, the majority of Americans live in a state where pot has already been normalized.
As Sessions is unlikely to come out with a new memo supporting cannabis and FinCEN doesn’t know where financial institutions can stand without running their own risks, the only real solution to the problem is for cannabis to be descheduled from its federal status as a Schedule I drug.