Question:  I’ve formed my nonprofit entity and want to open a bank account in the name of the entity.  Will my bank refuse to open an account because the business is growing and selling medical marijuana?

Answer:  Maybe.  If your entity has the word “marijuana” in its name, you may be dead in the water with many banks.  Unfortunately, many banks and credit unions refuse to do business with a medical marijuana business.  You may have to search to find a bank that is willing to open an account for your medical marijuana business.

In a  May 20, 2010, letter six members of the  U.S. House of Representatives asked Treasury Secretary Geithner to help solve the problem of banks refusing to do business with state legal medical marijuana businesses.  The letter states:

“dispensary operators are finding it increasingly difficult to maintain accounts with financial institutions, due to what a spokesman for Chase bank called, ‘financial operational and compliance risk.’  Thus, it seems clear that legitimate state-legal businesses are being denied access to banking services, which does not serve the public interest. Among other concerns, the effects of this denial of service include: (1) an increased risk to public safety with potential theft or robbery that any cash-only or cash-reliant business faces; (2) a decreased likelihood that medical marijuana vendors will have the ability to accurately account for tax liability; and (3) an affront to fundamental fairness. since forcing businesses to operate with cash exposes the owners to greater legal risk under the Bank Secrecy Act.

we respectfully request that your office issue formal written guidance for financial institutions assuring that Department priorities do not include targeting or pursuing institutions whose account holders are involved in a business ostensibly operating in compliance with a state medical marijuana law.”

In a  July 30, 2010 letter to Congresswoman Zoe Loftgren, the Office of the Comptroller of the Currency, Office of Thrift Supervision, Office of Thrift Supervision, National Credit Union Administration responded to the May 20, 2010, letter to Secretary Geithner and politely said the equivalent of the federal government couldn’t care less.  Here’s the conclusion reached in the letter:

“The decision to open, close or refuse a particular account or relationship should be made by a depository institution without involvement by its supervisor. An institution must make its own assessment of whether or not to accept an account based on its business objectives, an evaluation of the risks associated with offering particular products or services to customers or members, as well as its capacity to effectively manage those risks.”