Financing has always been rocky for Colorado s legal marijuana industry, which largely operates in cash because of the plant s federally illegal status. Only an estimated 35 financial institutions in Colorado deal with the cannabis industry and try to do so anonymously, according to Amanda Averch at the Colorado Bankers Association.
To move around this, some dispensaries are experimenting with digital currency and payment apps.
Boulder dispensary Helping Hands Cannabis was the first marijuana store in Colorado to accept Bitcoin and Ethereum, two popular forms of cryptocurrency, in 2019. The shop introduced the Strike Payment app to customers shortly after, allowing shoppers to scan their phone wallets QR codes for a cash-free plug. The app functions similarly to the Western Union and TransferWise money exchange services, but users don t have to deal with the nitty-gritty of taxes, fees or even the complexity of Bitcoin, as the Strike automatically converts U.S. dollars to Bitcoi
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Much has occurred in the last two months regarding the relationship between financial institutions and Marijuana-Related Businesses, or MRBs. In this post, we discuss three major developments, all of which share a complex connection. First, the National Credit Union Administration (“NCUA”) recently pursued its first enforcement action against a credit union for Anti-Money Laundering (“AML”) compliance failures when servicing MRBs. Second, two cannabis industry executives were convicted of bank fraud for allegedly tricking banks and other financial institutions into unwittingly extending financial services to their MRB. Third, and despite this enforcement drumbeat regarding MRBs, Congress has introduced again, with bi-partisan support, the SAFE Banking Act, which seeks to normalize the banking of cannabis by prohibiting federal bank regulators from taking certain actions against financial institutions servicing MRBs
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