On November 8, 2016, voters in three states-California, Massachusetts, and Nevada-legalized recreational marijuana. That brings to seven the number of states that have legalized recreational marijuana. In total, 24 states and the District of Columbia have some form of legalized marijuana.
Despite the increasing acceptance of legalized marijuana, the marijuana industry continues to face a significant hurdle in obtaining traditional banking services. That is, although states continue to “legalize” marijuana activities, the manufacture, distribution, and possession of marijuana are still prohibited by the Controlled Substances Act. For banks, that means that the activity also implicates federal anti-money laundering laws. For many financial institutions, the regulatory challenges associated with providing services to the marijuana industry remain too high. Though many smaller community banks and credit unions have proven willing to provide at least some limited services to the industry.
The recent elections reflect that legalized marijuana continues to have wide spread support across the country. As that movement continues, the pressure on the federal government to act to solve the marijuana banking dilemma increases. However, regardless of the number of states that legalize medical or recreational marijuana, until the federal government provides criminal, civil, and regulatory protection for financial institutions that provide services to the marijuana industry, the vast majority of financial institutions will continue to sit on the sidelines. Thus, although the recent elections may have some significance for the marijuana movement itself, the same cannot be said for the banking issue.