By Warren Pulley, VP Project 7 Security Group
Twitter: @P7securitygroup
Recently my clients have begun to ask me to research and inquire about the possibility of the “Cannabis Banking Working Group,” establishing a legal way for MJJ retailers in California to sell marijuana and CBD associated products, then take those proceeds and deposit them directly into the normal FDIC insured banking system.
Now while having access to the wider banking systems for legitimate, legally licensed establishments of all kinds is most certainly the best outcome, the MJJ industry unlike most is actually the market best suited for the type of regulator scrutiny the banking industry could provide. In addition to providing the marijuana industry with the legal means to conduct all types of business transactions, wider access to banking processes would also ensure that this booming business can establish trace and track methods. Trace and track methods are needed in this industry to ensure efficiency not only from a seed to sale standpoint but also from a public safety perspective by taking the enormous risk of an all cash operating businesses become a persistent target of criminal elements.
At the end of the day, public safety is better served by having a well-regulated MJJ business environment. If the State of California wants to cash in on soon to be very large tax windfall, then it should look to engage the Federal Government at the State level on legal ways to have proceeds of these establishments provided with some legal mechanism to deposit these monies sooner rather than later. The “Mildew Money” sitting off of the books doesn’t help anyone’s bottom line.
So in taking a look at the “Cannabis Banking Working Group,” I was impressed. It is a panel of very distinguished members of the State of California Legislature, Financial Executives, Risk Compliance Managers, and various Marijuana Business Regulatory individuals. They are in the very real business of finding a way to solve the problem of MJJ businesses remaining outside the full regulatory system and seeking common sense solutions to address the State and Federal conflict over the use and possession of Marijuana which still remains a Federal Crime.
People such as Dana Rohrabacher, U.S. Representative, and State of California Treasurer John Chiang are leading the effort to assist California and its marijuana industry. The aim is for businesses to become fully legal and compliant. However, it should be noted that Trump Administration, led by his Department of Justice are signaling their intent to have marijuana remain a Schedule I drug under the Controlled Substance Act. Keeping marijuana as a Schedule I drug voids any real efforts to bring State of California’s regulated marijuana business into the wider legal, regulatory environment.
Let’s dispel some rumors:
- The Cole Memo only states that the “Federal Government wasn’t going to come after” States that allowed some form of legal cannabis use. It does not in any way endorse the growing, selling, possession or use of marijuana by any person within the United States. It is not a tacit license to grow, sell, or distribute marijuana by the Federal Government in any form. Businesses should not seek the Cole Memo as a benchmark for how the Federal Government will proceed in the future with drug enforcement efforts. The Obama administration was lax on enforcement, don’t expect the Trump administration to continue this reasoning.
- There is no legal way for marijuana retailers to use the FDIC insure banking system to bank proceeds from the sale of marijuana. Although you will still pay your taxes to the State of California, the Federal Government will and has shown it will pursue Lawyers, Electronic Bank Transfers System operators and off markets money changers involved in the movement of cash proceeds through ad-hoc banking systems.
It is still my belief that for the foreseeable future, the best way to deal with the current regulatory environment is to build or contract out with cash vault operators, who have the ability to keep your cash under armed guard 24/7, in environmentally controlled and security monitored locations. It is also in the best interest of your bottom line to align your company with security firms that understand the regulatory environment and that are in State of California compliance to conduct security operations within the State of California.
Project 7 Security Group recommends that cannabis entrepreneurs select professional security services to protect dispensaries, grow operations, cash storage, currency transport, and fixed site operations. If you would like information on how Project 7 Security Group protects your cannabis business and profits, call us at (800) 560-3103, visit www.project7security.com or email me directly at wp@project7securitygroup.com.
