While marijuana has been de-criminalized across California, possession, distribution, and cultivation of marijuana is still against federal laws. This prohibition has put business owners who are conducting legitimate business operations under California state law in a difficult financial position: Where do they store the money they make from an activity that is legal in their state, but illegal according to the federal government? To make the matter even more challenging, banks are regulated by federal law, meaning that banks face racketeering charges if they accept deposits from people in the marijuana business.
A recent article by the Associated Press explains that the Feds have come up with some guidance for banks that will allow them, and even encourage them, to accept deposits from marijuana-based businesses.
The New Federal Marijuana Banking Guidance
The guidance is essentially a warning to banks to conduct business at their own risk, but establishes a series of "red flags" that, presumably, if the banks avoid will keep the banks out of trouble. For example, a few of the red flags listed are:
- A business' deposits are much greater than its competitors;
- The business is bringing in an inordinate amount of cash that is disproportionate to the amount claimed on the business' tax forms;
- The business is engaging in international business;
- The business experiences a surge in activity by third parties offering goods or services such as equipment suppliers or shipping services.