The Business Side of Marijuana

(Spring 2017) As you know, marijuana is still illegal at the federal level in the United States. This, in turn, prohibits banks from doing business with those in the cannabis industry, even if the state in which a company operates has legalized the drug. However, this doesn’t mean those business owners are keeping cash inside a mattress.

Even though the nation’s four largest banks (Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co.) all claimed in 2015 that they refrained from opening accounts for marijuana-related companies, a recent study revealed this is not the case. The results showed that 29 out of 84 Massachusetts marijuana dispensaries who applied for an operating license between June 2015 and September 2016 listed one of these banks as their financial institution.

However, banks may rethink their actions with the confirmation of Attorney General Jeff Sessions, who has stated that he will uphold federal law.

Speaking of the business side of marijuana, Oregon’s Department of Revenue recently disclosed that receipts for recreational cannabis within the state remained in a free-fall during the last quarter of 2016. Oregon collected a record $7.8 million in sales tax last October, which then dropped 28% in November, and declined another 13% to $5.6 million in December. Marijuana merchants say that demand continues to rise, but their proceeds have slumped due to limited supply. Tight obtainability is due to new permit procedures and concerns about pesticide use.

Last year Oregon collected $60 million in sales tax on recreational marijuana, far above the $45 million projected by the state at the start of 2016.

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