Marijuana was legalized by the state of Colorado for recreational use as of January 2014. In the first week, it’s reported over five million dollars of pot was sold by dispensaries, making it about as good as the Avengers movie opening weekend.
Unlike the Avengers movie, you can’t just swipe your debit card to buy some sweet bud. Thanks to the Controlled Substance Act, the Federal Government still sees pot as a Schedule I drug. You know who else is governed by federal laws? Banks.
Banks were once a much more state-oriented institution, up until the 1990s. If you banked in one state, drove to the next state over and tried to do business with a branch of the same bank, you probably wouldn’t be able to do too much. This isn’t the entire reason, but as banking began to spread across state lines, it began to fall further and further under Federal rules and less on state laws.
So, the banks that issue credit cards, offer merchant accounts, accept EFT transfers, and all other non-cash transactions, are worried that their involvement in the marijuana business in Colorado will bring scrutiny on their books.
There’s a simple parallel to this, though. You know who else does business that’s legal in their state but illegal in other states? Nevada brothels. It’s possible to use your credit card at the brothels, so at some point banks stopped worrying and took the brothels in their greedy, greedy arms. Sure, there’s no broad Federal law banning prostitution, so marijuana is a bit more restricted in that way. However, once banks get comfortable with this newly-legal industry, they’re gonna find some way to make money off it. Who has ever heard of a bank passing up on business for moral reasons?
Update 1/23/14: The Justice Department will change laws to allow banks to deal with legal marijuana businesses.