DEA Holds Stance Against Marijuana SMEs

In states where marijuana use is legal, small businesses that sell the drug still struggle due to federal law. With marijuana illegal at the national level, these SMEs, while they may be legal within their states, are challenged to find banking services, as financial institutions won’t risk running afoul of federal law enforcement.

The federal Drug Enforcement Administration doesn’t appear to be planning on making this challenge any easier either.

According to accountant and head of consulting firm Marks Group, Gene Marks, who wrote a post on the issue for The Washington Post on Friday (Aug. 12), the DEA reaffirmed that marijuana remains illegal under federal law and reinforced the classification of marijuana as a Schedule 1 drug, meaning it is considered “highly addictive and without medical benefit,” as the publication explained.

“There is no evidence that there is a consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognized disorder,” the DEA concluded.

That means small businesses selling marijuana legally in Alaska, Colorado, Oregon and Washington will continue to face roadblocks when seeking financial services. According to reports, marijuana sales through these sellers surpassed $5 billion in 2015 alone.

But these SMEs are often forced to work in cash only, meaning they must transport duffel bags of cash and manually record and manage all of their finances without any services from banks.

“Right now, the Obama administration is ‘looking the other way.’ But the DEA is not,” wrote Marks. “Depending on who’s occupying the White House and Congress in 2017, there’s always a risk that the government may take a harder line against this industry, regardless of what state laws have passed.”

Some lawmakers have fought on the side of these small businesses in recent months, and corporations are now joining the fight to get these small businesses access to financial services.

Microsoft recently launched a partnership with KIND Financial to help federal officials track the operations of legal small marijuana businesses. KIND Financial provides financial services to the industry in the form of electronic payments acceptance solutions and other tools.

These efforts may be thwarted — or aided — by the result of the upcoming presidential election, Marks suggested.