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It's not merely Colorado marijuana-related businesses that are having a tough time finding a bank that won't kick them to the curb. A Texas businessman suddenly found that his Texas bank considered him akin to a Typhoid Mary when it discovered that he was hosting a marijuana business investors conference in Houston.
Stuart Maudlin, the Houston entrepreneur behind Marijuana Investment Conferences, has closed his account at Amegy Bank, a unit of Salt Lake City-base Zions Bancorporation (Nasdaq: ZION) and Houston's fifth largest financial institution with nearly $10 billion in local deposits, after receiving a letter that the account would be closed within 10 days.
Maudlin received a letter from Amegy Bank dated May 15, which he shared with the HBJ, that said, "Amegy Bank regrets to notify you that we will be closing the Amegy Bank account referenced above."
The account is listed as Silent Auction Services Inc., DBA Marijuana Investment Conferences.
"I can reasonably infer that they're worried about having drug money show up in my account," Maudlin said.
The bank declined to say why it was closing the account.
My guess is that if he'd had the foresight to name the account "Silent Auction Services Inc., DBA Hooters Investment Conferences," he would have been A-OK with bankers in Texas.
The ongoing failure of Mary Jane-centric businesses to obtain access to the banking system has prompted the governors of Colorado and Washington to, again, write the federal banking regulators and ask them for guidance. They did this last October. The regulators told them they'd take a look at the need for guidance once the DOJ and FinCEN responded with their concerns. FinCEN did that in February, but that "guidance" not only didn't help matters, it made them somewhat worse. Banks are more afraid of enforcement action by their primary federal banking regulator than they are of a criminal indictment from the DOJ, although they're worried about both possibilities. The bottom line is that banks need to know what the bank regulators might do to them if they bank a (state law) legitimate marijuana business, or a business that sells products or services to a legitimate marijuana business. By legitimate, I mean one that is legal under Colorado (and, in the near future, Washington) state law.
Some critics think that Colorado and Washington deserve to stew in their own juices, since they are arguably "outliers" in the drive to legalize the recreational use of marijuana. However, other states are considering similar laws, and 20 states have medical marijuana laws that also violate federal laws. Heck, even a stalwart conservative crank like Texas Governor Rick Perry is publicly in favor of legalizing recreational marijuana use.
[As an aside--can you imagine how even more daffy Perry might end up sounding like in a 2016 presidential primary debate if he starts toking?]
The point is, sooner or later, the federal banking regulators need to come to grips with this issue. They might as well do it sooner than later, because this reefer madness is not likely to abate, but only to snowball until this country becomes one stoned-out, unbanked mass of munchie-seekers torn between the need for Doritos and the fear that the fifty thousand dollars in cash they carry in their underpants makes it unsafe for them to venture outside to buy a bag.
