Nevada's Banking Bill is Not a Viable Solution
Over the past few years, I’ve been an entrepreneur in the legal marijuana industry in Nevada and elsewhere. I can tell you firsthand how incredibly frustrating it can be to operate in an industry for which banking services are generally unavailable. Actions that most entrepreneurs take for granted, like making deposits, transferring payments, remitting employee payroll tax withholdings or sending earnings distributions to out-of-state investors, become incredibly difficult and dangerous when it all must be done by physically moving cash. Unfortunately, however, the proposal would mostly fail to solve the legitimate needs of the industry and would not improve the physical safety at marijuana dispensaries. The reasons for this are not shortcomings of the legislation itself, per se, but limitations inherent to a banking system that is predominantly regulated at the federal level. Understanding this history is important because any attempt at a marijuana bank in Nevada would likely run into similar complications. SB 437 essentially abandons hope of a marijuana bank receiving a Federal Reserve master account and only authorizes the bank to issue limited checks that would not go through the Fed clearinghouse. Those checks would only be payable to state and local governments for taxes and to certain in-state vendors who could only cash them at the marijuana bank. This means the marijuana bank would mostly be a glorified vault for marijuana businesses. This isn’t the type of fix that will improve the safety of marijuana businesses or their customers. The bill also requires the proposed bank or credit union to acquire deposit insurance. It’s unlikely that would happen unless the institution plans to serve a much broader population.