Elizabeth Warren is an unlikely friend to the cannabis industry. 

Back in 2011, Warren was asked point blank about supporting legalized cannabis

Front runner Elizabeth Warren was a firm and frigid no on the question, departing from her mostly disarming demeanor.

But oh, times, they are a changing.  Warren has done a 180 on the topic, and is now one of the primary supporters for creating laws that enable legal cannabis and marijuana business owners to open traditional bank accounts and make deposits like any other business. 

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There are currently 28 states with some form of legal cannabis on the books.  

Elizabeth Warren, if you don’t know her, is a Democratic Senator from Massachusetts.  A state that just passed recreational marijuana use this past November.  And in response, Warren joined 9 other senators in penning a letter to the Financial Crimes Enforcement Network (FinCEN), requesting a review of practices and prohibitions for cannabis companies in these 28 states – 

“You make sure that people are really paying their taxes. You know that the money is not being diverted to some kind of criminal enterprise,” Warren said recently. “And it’s just a plain old safety issue. You don’t want people walking in with guns and masks and saying, ‘Give me all your cash.’”

What does this mean for the legal cannabis industry?

Well, right now, not much.  While a majority of states, with direct voter mandates, have legalized the use of CBD and/or the rest of the plant for medical or recreational use, the DEA still classifies marijuana as a Schedule I drug; making it illegal to traffic in the product on a federal level.  

Banks don’t want to touch legal cannabis businesses – several years ago the Cole Memo was published (during the Obama administration, no one knows what will happen yet with the Trump administration), and it was followed by guidance from the FinCEN, that states that in essence, a financial institution is required to file a suspicious activity report involving any marijuana related business because federal law still prohibit the distribution and sale of marijuana.

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Warren, and her fellow senators, want to see that guidance rewritten, and structured to be favorable towards business owners that are complying with state and local laws regarding legal cannabis.  

Why can’t business owners in states with legal cannabis have bank accounts if they are only doing business in their state?

Here’s the crux of the matter…  most banks, aside from small local branches, are multi-state entities, and parts of the transactions might be done in another state.  For instance, a credit card issued to a person living in Colorado, and accepted by a business in Denver, isn’t really just a transaction that happened in Colorado. 

The card issuer is likely headquartered in South Dakota (very favorable regulations allowing card issuers to charge outrageous fees to cardholders), even though the buyer’s branch is in Durango.  The interchange system, which validates card transactions, is owned by Visa (or Mastercard) and in the US, that company is incorporated in Delaware.  

Banks may outsource fraud control and scoring on transactions – on both the merchant side and the issuing side, and those companies may be located in California, Utah, or Florida (to name a couple).  

So a dispensary that accepts credit cards would absolutely be doing business in multiple states, under the current way of looking at things.  And a dispensary that only accepts cash would potentially be making large deposits in cash, triggering flag notifications to the powers that be (FinCEN, IRS, etc).

It’s a crazy system in the financial world and it’s not friendly to locally owned retail cannabis outlets. 

And while the banks may seem to do what they want, with only a slap on the wrist as punishment for getting caught, most banks don’t want the hassle of marijuana business on their books.  

There have been a few people who came up with ideas that they believed would work – using offshore bank accounts, indigenous people’s banks to process transactions and so on, but at the end of the day, there’s still the interchange network, which is owned and serviced by Visa and Mastercard.  Who also don’t want anything to do with cannabis sales.  

Visa launched a new set of regulations about 15 years ago – designed to ‘protect the brand’, and many adult oriented businesses, gaming sites, and other “fringe” type industries found themselves without credit card processing, or paying so much for it that profits evaporated with approvals.  Not a good situation. 

So we’re still in wait and see mode.  Even if FinCEN decides to rewrite their guidance (just another word for do it this way or we’ll skin you alive), it’s still going to be up to the new administration to determine what, if anything, they’re going to do to enforce the federal law vs. the state laws. 


Should be an interesting year, this 2017!