A lot of cash is expected to flow when Ohio legalizes medical marijuana towards the end of 2018 or early next year. However, all that expected cash is causing serious concerns since financial institutions like banks and credit unions are reluctant to offer banking services to cannabis businesses.
The reluctance of the banking sector stems from the fact that the federal government still regards marijuana as an illegal substance. Consequently, money laundering and other federal charges could be imposed on any financial institution that does business with a cannabis enterprise (dispensary) that is legal at state level.
Ohio expects the medical marijuana sales to peak at about $300 million within the first year of legalization. Financial institutions are opting to forego all those deposits and other transactions just to be safe from the wrath of federal prosecutors.
This means that medical marijuana dispensaries will have to accept only cash from patients and then keep that cash to pay salaries, taxes and any other costs associated with the business. In the meantime, the cash will be lying around in safes, vaults, trash bags or any other container into which dispensary operators will decide to stash their revenues.
Such large amounts of cash will certainly pose a public safety and security hazard since cannabis businesses will become attractive targets for criminals who will be tempted to lay their hands on that money.
The dispensaries may have to install security cameras, steel doors and security guards to protect the premises from break-ins. However, the reality in other states where banking services aren’t available to cannabis businesses shows that those security measures aren’t always effective in deterring crime.
The state regulators are aware of the risks that cannabis dispensaries will face and numerous measures will have to be implemented by the businesses in order to ensure that employees and customers are safe.
For example, all dispensaries must install alarm systems which have to be activated once business hours end and the facility is closed. Round the clock camera surveillance is also mandatory, among other stringent security measures.
The signals coming from Washington aren’t making matters any easier. First, Attorney General Sessions cancelled a memo which had been written by the Treasury Department clarifying that financial institutions wouldn’t be prosecuted for offering banking services to cannabis businesses in states where legalization had taken place.
This difference between state and federal laws is certainly keeping companies like Net Element (NASDAQ: NETE) and TransCanna on tenterhooks since each set of laws comes with its own list of complications.
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