I'm not sure if it's the collateral paranoia engendered by Operation Choke Point, the fact that regulators are on a crusade to root out evil wherever they see it (and they know it when they see it), or if somebody simply got ahold of a bad batch of weed, but the way banks are treating any business remotely (and I mean "remotely") connected with the (state) legal marijuana business has officially jumped the shark. It's time to untwist the knickers and take a deep breath.
We discussed not long ago a Texas promoter of a conference on legal marijuana businesses being cut off by his bank. More recently, we've discovered that Wells Fargo has thrown one of its Washington customers under the bus because he publishes a magazine with the word "marijuana" in the title.
Last week, Marijuana Venture magazine publisher Greg James said he was informed that Wells Fargo Bank would not accept deposits from the limited liability company that publishes the magazine.
Never mind that Marijuana Venture merely writes about the legal cannabis industry and does not promote marijuana use. "We are simply running stories on how to navigate the industry and promoting best of breed business practices," James said.
James is not the first person in Washington to find it difficult to work with banks because his business has at least some connection to marijuana. A banker told one Seattle-area entrepreneur who grows medical marijuana to stop bringing cash that reeks of weed into the branch. But James' business has nothing to do with the growing, processing or sales of actual marijuana. He's publishing a magazine about marijuana.
I get the "cash that reeks of weed" repugnance. After all, the largest banks only desire "cash that reeks of greed." That stink smells like a whiff of heaven to them.
James makes the valid point that once you start down the slippery slope of "unbanking" publishers of newspapers and magazines that are focused on discussing legal marijuana issues, you're not just on a slippery slope, you're riding a waxed toboggan down the slope.
James wonders whether banks would not deal with the Puget Sound Business Journal because the paper reports on the marijuana business. And what about the Denver Post, which has a marijuana editor?
I assume that the Post's marijuana editor had just consumed an entire bag of "Hashey's" bars and was "unavailable for comment."
The longer the federal bank regulators take to issue guidance on this issue, the longer it will take for the smoke to clear. Even though no one expects the regulatory agencies to put their seal of approval on banking MJ businesses themselves, they could give banks some comfort about banking the businesses that serve those businesses, like the landscape company that irrigates the plants or the electrical contractor that services the heat lamps. At the very least, they could assure quivering masses of protoplasm like Wells Fargo that the risk posed by Marijuana Venture is acceptable, especially compared to the risks of, for example, banking folks who are actually on OFAC's SDN list.