Under the federal Controlled Substances Act, any bank that takes money from an illegal enterprise can lose its FDIC coverage and potentially be prosecuted. This means that unless Congress amends the law, marijuana businesses in places like Colorado and Washington state that have legalized recreational use of pot must be cash-only, creating a potentially dangerous situation in which they must keep thousands of dollars in cash on hand, says Stateline. At a Senate hearing on Tuesday, King County, Wa., Sheriff John Urquhart asked Congress to work with the Department of Justice and the Internal Revenue Service to open up banking to legal marijuana businesses.
“Marijuana businesses operating as cash-only businesses create two problems for us,” said Urquhart. “Cash-only businesses are prime targets for armed robberies and cash-only businesses are very difficult to audit, leading to possible tax evasion, wage theft and the diversion of resources we need to protect public safety.” Additionally, a recent audit found that Colorado's public health department has not adequately monitored doctors prescribing medical marijuana. The study found that just 12 doctors wrote prescriptions to over 50 percent of the state's 108,000 medical marijuana patients. “Why has the Department of Justice decided to trust Colorado to effectively regulate recreational marijuana when they haven't regulated medical marijuana?” asked Sen. Charles Grassley (R-Ia.)