LANSING, MI – It was chilly on the morning of Dec. 15., but Michigan State Police stood outside a state office building. They were there for safety, ready, as the Bureau of Medical Marihuana Regulation opened its doors, for some applicants to show up with the $6,000 application fee in cash.
Michigan lawmakers authorized a new medical marijuana industry in 2016, and the state began accepting applications to be a part of it on Dec. 15, 2017. But businesses seeking inclusion are already running into a roadblock: banks won’t take their money.
“It’s not that banks don’t want to. It becomes a very significant risk,” said Patricia Herndon, senior vice president of government affairs for the Michigan Bankers Association.
Federally, marijuana is considered a Schedule I substance, a category that means the government considers it to have no medical use and a high potential for addiction. The revenue from a state-authorized medical or recreational marijuana business can potentially be viewed as drug money by the federal government.
In Michigan, medical marijuana is legal and its industry is projected to expand rapidly. A House Fiscal Agency analysis of the bill lawmakers approved projected it would grow to $837 million annually. As of Feb. 2 there were already 146 businesses who have submitted prequalifications with the Bureau of Medical Marijuana Regulation, and another 618 had started the online application process.
But without being able to rely on basic banking services, those medical marijuana business owners are struggling with how to remain above-board.
Paul Samways, an accountant with Cannabis Accounting, said he’s currently going out to clients to count their cash. And when the businesses start operating under the new scheme, it only gets more complicated if they can’t cut checks or store money.
“These guys aren’t hiding stuff in their mattress, they want to be above-board, they want to make sure everybody knows what’s going on, they want to pay their taxes… how do you do it without a bank account?” Samways asked.
Banks shy away from marijuana money