For some in the marijuana business, going legit is turning out to be harder than it looks.
A widely recognized benefit of marijuana legalization is the ability to regulate an industry that has previously thrived on the black market. But current financing standards are keeping legal businesses in the complicated, and expensive, practice of all-cash operations — from not being able to accept credit cards to figuring out how to store and keep track of their money and handling payroll.
This industry will struggle to mature because it doesn’t have access to traditional banking, says Derek Peterson, chief executive of Terra Tech, a marijuana production and retail company.
Given marijuana’s illegal status on the federal level, and that the federal government regulates banks, financial institutions are reluctant to do business with companies involved with cannabis. If federal auditors find that institutions are working with a marijuana-related business, those institutions could lose their Federal Deposit Insurance Corporation insurance, thus risking the security of the finances of other businesses in their portfolio. read more