What happens when you legally sell marijuana and want to deposit your earnings at a bank? The federally licensed bank denies your deposit. Marijuana is illegal at the federal level and therefore federally licensed banks can't accept deposits from these marijuana businesses. Visa and MasterCard will not process transactions for pot dispensaries. Therefore, FinTech companies are working on solutions, startups such as Tokken, Hypur and Kind Financial, are creating software that helps banks and dispensaries monitor and record transactions, with the long-term goal of moving transactions away from cash.
The Department of Justice has said that it will generally let states enforce their own laws on marijuana. And the arm of the Treasury Department responsible for enforcing money-laundering laws has provided guidelines for banks that want to work with marijuana-related businesses. But federally regulated banks have generally refused to open accounts, and credit card companies have prohibited transactions from going across their networks. There are already several, less savory ways of dealing with the cash problem. Some dispensaries open bank accounts under fake names. Mr. Zarrad, the founder of Tokken, said that in his regulatory work, he caught a number of these schemes when he was examining banks in Colorado.