The tide of support for cannabis legalization is rising, but banks and credit unions will undoubtedly have to wait until after the 2016 elections before getting a clear green light to serve pot businesses.
Next year is expected to be pivotal for marijuana policy across the country, with at least five states expected to vote on full legalization and another handful considering some form of decriminalization for medical use. If these measures succeed, it will put still more pressure on lawmakers to help marijuana companies get access to financial services — a policy with growing support in state capitols and among the public.
Twenty-three states and the District of Columbia have laws legalizing marijuana in some form, including four that allow its recreational use, according to the Governing website. But the U.S. still includes marijuana on its list of illegal drugs, and that is what concerns many bankers.
Federal legislation to give marijuana businesses access to the banking system stalled in both the House and Senate, and banks are not expected to get a go-ahead from Congress anytime soon.
Political gridlock is an ongoing problem on Capitol Hill generally, and representatives may be even less likely to stick their necks out for controversial legislation in an election year, said Taylor West, deputy director of the National Cannabis Industry Association, which lobbies on behalf of the industry.
"There's no question that these measures have bipartisan support. The problem is more the general dysfunction of Congress," she said. "I am more optimistic looking past November 2016."
Improvement in bank access will be gradual, observers say. The number of banks and credit unions that feel comfortable testing the pot-banking waters is likely to keep rising, but the lack of clear federal laws permitting them to do so will prevent a rush into the industry.
"We'll start to see more banks getting into it, as we have seen, but they'll probably continue to fly under the radar," said Kris Krane, co-founder of 4Front Advisors, which consults with marijuana businesses on regulatory issues.
There are no rumblings that financial regulators are preparing to revisit the issue, West said. Regulators have adopted rules laid out by the Financial Crimes Enforcement Network that allow banks to serve legal-pot companies if they follow strict oversight and reporting guidelines, but relatively few are willing to take the risk with pot still federally illegal.
There were 266 depository institutions serving marijuana companies as of the end of July, according to a Fincen document obtained through the Freedom of Information Act.
The Fincen guidance "has not been particularly effective" in opening up financial services to the pot industry "because it doesn't change any of the law," West said.
On the state level, a lawsuit between a Colorado credit union and a regulator could provide a little more room to serve marijuana companies. Fourth Corner Credit Union in Denver sued the Federal Reserve Bank of Kansas City this summer for access to the financial system, and the suit is likely to be decided in the coming months. The parties were scheduled to meet before the end of the year.
Fourth Corner was chartered by Colorado to serve the marijuana industry, but the Kansas City Fed denied it a master account, effectively locking it off from the financial system. Fourth Corner then sued the regulator to force it to issue an account.
Most legal experts say the credit union faces long odds in winning, but success "would at least open a clearer path for others to follow," West said.
In the meantime, the pot industry and financial institutions will wait for next November.
Florida is set to consider medical marijuana and California to vote on full legalization, and if successful that would add the two huge state economies to the legal-pot side, likely putting still more pressure on federal representatives to solve the banking shortage. State and local governments have pressed for more bank access for pot companies, because relying solely on cash makes businesses inviting targets for criminals.
There is a major wild card in the push for reform, however: President Obama.
"Where there's a stalemate in Congress it could open up the possibility of more aggressive action by the executive branch," said Tyler Alexander, an attorney in the cannabis-law practice of the law firm Harris Moure.
In his final year of office, Obama could potentially direct federal agencies to help smooth the road to bank access. There is also the possibility that he will take the long-rumored and unlikely step of removing cannabis from the federal controlled-substances list and effectively legalize it nationwide — which he can do without congressional involvement.
"Nobody is willing to take the first step, but maybe, just maybe, President Obama will do what's in his power to clear things up," Alexander said.