The Marijuana Industry’s Access to Banks

Vaults, armed guards, and paranoia are costs of doing business today in the recreational marijuana industry. Because they have little access to banking, marijuana business owners must conduct their day-to-day operations entirely in cash. “Nothing has gotten violent yet,” says Andrew Freedman, Colorado’s marijuana coordination director, “but we’re kind of asking for it.”

In a recent paper, University of Alabama law school professor Julie Andersen Hill argues for legislative and regulatory changes to allow marijuana businesses to open up bank accounts.

Currently, four states – Alaska, Colorado, Oregon, and Washington – along with the District of Columbia allow recreational marijuana use. These states regulate marijuana in a manner akin to alcohol, prohibiting sales to minors, requiring business registration, and taking regulatory measures to keep other illegal drugs out of the industry.

But marijuana is still illegal under federal law. This prohibition poses numerous challenges to the rapidly growing trade, including limiting access to banking. Not only does...

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