When Colorado legalized marijuana for recreational use, people argued back and forth all the issues that would come from marijuana being legal on the state level. What makes this situation interesting is that marijuana is legal for recreational use by Colorado, but it's still an illegal substance on the federal level. That means if you have the paper work to use marijuana legally in Colorado, a federal officer can still technically arrest you even though it's highly doubtful that it will ever happen.
This issue of legal on state vs. federal level is currently giving the recreational marijuana businesses its most unlikely issue. A NYTimes video crew interviewed one of these businesses, Karingkind. The owner of Karingkind, Mark Mason, talks about how business is booming for them, but their biggest issue is banking. Karingkind, or any other recreational marijuana business, cannot open a checking account, have company credit cards, or accept cards due to the lack of a bank account. What this has led to is a risky, cash-only operation with hired private security.
The reason for Karingkind and other businesses similar to them, including the protection company they hire, cannot bank is due to the jagged line of state to federal law in Colorado. Banks function by owning a master account with the Federal Reserve, and from then on follow federal regulations.
Federal regulations currently state that no bank may accept money gained from the selling of illegal substances. The moment any bank receives that money from a business like Karingkind, it immediately gets classified as money laundering. To add insult to injury, any business affiliated with a recreational marijuana business and receives payment from them suddenly finds themselves in a similar situation due to being a beneficiary of funds from a federally illegal substance. The best part about all this is that even though companies that deal in recreational marijuana are still forced to pay federal taxes, an yet they still cannot open a single account with any bank.
Karingkind now has no choice but to accept cash only. Until a bank opens up, recreational marijuana companies now have no other options but to pay their employees, taxes, bills, and anything else they may have to pay for only in cash. On top of this, Karingkind is growing unbelievably fast, so where are they putting all of the money they're making?
Various times throughout the month, they take something like tens-of thousands of dollars; hires 2 armed guards, and drive to a secure drop location some undisclosed location in Colorado. This is not only an unsustainable business model, but it also puts the lives of multiple people at risk.
To help put an end to this issue, a business was announced fairly recently named "Fourth Corner Credit Union." Fourth Corner is a bank, which hopes to serve specifically the recreational and medical marijuana business. While they can technically open and operate, they are waiting on the Federal Reserver response on whether or not they will be given their master account.
If the Federal Reserve grants Fourth Corner their master account with the bank, all of this risky moving of enormous sums of money can stop and they can function like a normal business. If the federal government denies their master account, suddenly the issue of how long it will take them to come around becomes the real question. There was another situation that was solved pretty recently.
Same-sex marriage was a state-to-state issue for years, until the Supreme Court (part of the federal government) made a sweeping decision to legalize it across all states. Something similar will need to happen to Colorado or any other state that has, or will legalize marijuana for recreational use, before it can become a valid business practice.