"There aren't many opportunities to do what we do without running a cash business," says Ott, who signs off his emails with a "High Regards" and says he has taken marijuana for medicinal purposes. "We wanted to give people the option of operating their businesses in a different way."
Davis, the Seattle grower, says he devised a strategy to get access to banking services and to trick banks into granting accounts. The approach hinges on revealing as little information as possible.
"When the bank asks you what kind of business you're going to run, you should say, 'We're not sure yet, but we know we're going to make money,'" says Davis, who teaches classes on how to run a cannabis business. "It's not lying, but it's not entirely telling the truth, either."
Davis also suggests that any operation doing business as a pot seller should be set up under a holding company with a name that doesn't refer to reefer at all."Banks don't require that you tell them what the DBA is, so if your parent company is something like, 'World Corp.,' you should be safe," Davis says. "If you go in there with words like 'cannabis' or 'marijuana' in your business title, the bank is going to dismiss you right away."
But Davis' students may want to consider the potential flaws in this strategy.
For starters, even the most rudimentary Know Your Customer policies should allow banks to sniff out half-truths and outright bogus information that a would-be client supplies about its basic operations.
Davis says he understands that if banks were to find out the true nature of these businesses, they could close the accounts immediately. Experts say banks potentially could do much worse-blacklisting certain business owners, filing Suspicious Activity Reports with the Financial Crimes Enforcement Network or pressing fraud charges. After all, banks themselves are at risk of running afoul of regulators if they allow themselves to get duped by a customer.
But at this point in drug-legalization history, Davis sees few alternatives for marijuana sellers who want access to financial services."Right now, there's just no way to do this if you're up front," he says. "Until the feds do something, until banks follow suit, we're stuck."
Davis and other marijuana entrepreneurs could be waiting a while for resolution to the issue. Though the Obama administration says it will not bring federal charges against sellers complying with laws in their own states, the Treasury Department has not yet clarified guidelines for banks as to what they legally can do for businesses in this sector. (Treasury officials declined to comment for this story.)
In November, a Colorado congresswoman introduced new federal legislation that would allow states to pass their own laws on controlled substances. But the bill has been stuck in committee since then, and there have been no indications from the federal government that changes to the Controlled Substances Act are imminent.
So the growing acceptance of marijuana as a legal substance, at least in some states, continues to complicate the compliance picture for businesses attempting to stay on the right side of state and federal laws.
Without some sort of clarification, the ABA's Rowe says, banks will continue to eschew would-be customers in the marijuana business.
And for marijuana sellers seeking a greater sense of legitimacy, and perhaps also for banks eager to find new sources of growth, that's just a drag.
Matt Villano is a freelancer. He is based in Healdsburg, Calif.