The Denver Post

Marijuana business owners looking for banks willing to handle their accounts are finding resistance in the most unlikely place: their own industry.

Recent federal guidelines opened the door slightly between banking and marijuana -- two industries kept apart by federal laws that still deem the drug illegal. But business owners in search of a bank account -- for little more than a place to deposit wads of cash and pay employees -- are finding it’s more an industry trade secret than they expected.

On one level, pot businesses with bank accounts are worried they could endanger what’s likely a precarious relationship simply by allowing its existence to be known.

On another, it’s a matter of good old-fashioned competition at work -- survival of the fittest.

And those able to open bank accounts are in better shape than those who can’t, mostly because doing business becomes so much easier.

"It’s unusual and cruelly ironic to have an industry that’s being denied basic banking services, then threatened with the loss of those services if they share that they have it," said Taylor West, deputy director of the National Cannabis Industry Association in Washington, D.C.

One owner of a recreational marijuana shop in Colorado Springs said he has been turned away from about two dozen banks where he tried to open business accounts.


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He said other dispensary owners with whom he has chatted simply won’t share where they bank.

"They (pot shops) all act like it’s a top-secret thing since they already have a banking relationship," said the owner, who agreed to speak only if his name or business was not identified since he’s forced to be a cash-only enterprise. "They think if they give that data away freely, it might impact their ability to continue their banking relationship."

That’s because a number of Colorado pot-shop owners -- both of medical-only and dual medical-recreational stores -- have had bank accounts closed for reasons varying from discovery of the business’ core product to a banker’s cold feet.

"It’s not surprising that information isn’t shared readily, given the history of the industry with banking," West said. "We all know of those who, over the past few years, have had accounts and find them shut down in a matter of months."

Although recreational marijuana sales became legal Jan. 1, the issue with finding a place to bank isn’t new. Medical marijuana shops have been around since the law passed in 2000, but recreational sales have dwarfed the revenue stream by millions of dollars, commensurately increasing the risk of theft, burglary and robbery.

The problem has some noting the irony that an industry reliant on its members for its eventual success can be in a position where sharing key information can actually contribute to its demise.

Denver-based Marijuana Industry Group, which represents 130 licensed dispensaries, fosters camaraderie among its members and the sharing of business information -- no different from hundreds of other trade associations that exist.

"If we don’t hang together, we hang separately, but this banking issue is the one area that it’s tough to do that," MIG executive director Michael Elliott said. "Whatever (banking) relationship that existed no longer does when it’s made public. As soon as you say it out loud, it’s no longer true."

One MIG member has seen 15 bank accounts closed in just three years, Elliott said.

"I do have a bank account, and I’m not that willing to share it," said the owner of a Denver-based recreational shop protective of his banking setup. "A lot of it is because we’re just concerned that our own relationship will disappear should anyone approach our bank."

Two key branches of the federal government -- the Department of the Treasury, specifically its Financial Crimes Enforcement Network, and the Department of Justice -- earlier this month jointly said banks could openly do business with marijuana shops in states where sale of the drug is legal. The caveat, though, is that bankers must still file paperwork -- called suspicious activity reports -- that either identify those businesses as legal and unlikely to be a problem for federal drug investigators, or as possible troublemakers.

Although the marijuana industry saw it as a long-awaited permission slip for establishing bank accounts that they covet, bankers saw it differently.

Colorado Bankers Association CEO Don Childears said the guidance, at best, "amounts to ‘Serve these customers at your own risk’ and emphasizes all those risks. Bankers had expected the guidance to relieve them of the threat of prosecution, should they open accounts for marijuana businesses, but the guidance does not do that."

That’s left a quiet undertow of banks -- many of them small, community banks that probably had a prior relationship with a business owner that now owns a marijuana shop -- willing to step in. But most will bank only limited numbers of pot businesses and, as some bankers have said privately, without broadcasting it.

Colorado Springs State Bank was the last institution in the state to openly bank marijuana businesses. That ended in 2011, when it closed about 300 accounts, worried about banking businesses that are, under federal law, illegal.

Toni Fox, owner of 3D Cannabis Center in Denver, was more than happy to let other shop owners know where she banked -- a helpfulness that nearly cost her.

"I’ve been asked to keep it down at the risk of my own accounts," she said. "We’re an industry reliant on each other to help make it work, but it’s almost at our own personal survival."

But gaining a competitive edge also comes into play, where having a bank account places one dispensary owner at an advantage over one who doesn’t have one.

"Many MJ businesses are on their own, trying to figure out how to get it done," the Denver shop-owner said. "Everyone isn’t looking for everyone to succeed. It’s definitely business and competition, to beat out the other guy, and those who are savvy enough to know how to do it are better positioned."