Viewpoint: Banking Regulations Could Cost States a Cannabis Windfall

The nation’s rapidly expanding legal cannabis industry, which operates in 24 states and the District of Columbia, faces a multibillion-dollar question: what to do with the millions of dollars in cash it collects each year? To date, nearly all the nation’s banks have refused to open accounts for hundreds of state-legal state cannabis businesses, leaving these businesses to operate almost entirely in cash. Governments, in turn, have difficulty monitoring criminal activity and properly collecting tax revenues.

This problem could reach alarming proportions soon if California becomes the next state to legalize the recreational use of marijuana, a distinct possibility with voters expected to consider a ballot measure in November and polling showing support for adopting the law. The state’s legislative analyst recently estimated the marijuana industry could generate as much as $1 billion per year in funds to state and local governments, but the ability to collect the true windfall could be severely hampered by regulatory obstacles for the banking industry.