Cannabis plants grow inside Colorado Harvest Company's 10,000-square-foot facility in south Denver. Credit: Andy Colwell for Billy Penn

One of the chief concerns about constructing medical marijuana dispensaries and growing facilities in Philadelphia is security. In other states that have legalized medical cannabis, growing sites have become targets for break-ins — but not necessarily because fiending burglars want to get their hands on sweet, medically acceptable kush.

Dispensaries and growers are often targets because of how most of them conduct business: Cash. Most major banks won’t work with marijuana-related businesses for fear of running afoul of federal regulations that stipulate marijuana is a Schedule 1 drug. And that’s expected to create real problems for marijuana-related businesses here in Pennsylvania, as it has elsewhere.

Steve Schain, a Pennsylvania-based attorney with the Hoban Law Group who consults for marijuana-related businesses, said the majority of banks, credit unions and credit card companies won’t provide these businesses with financial services, sometimes leaving the sellers sitting on mountains of cash.

What could that mean for businesses operating in this $7 billion a year industry? While there’s little consensus around how much dispensaries actually make, most marijuana-related businesses would have to store thousands of dollars in cash without a bank. And a grower or a processor— which under PA law needs $250,000 on-hand to be considered for a license — could have to stash millions.

Schain said that under the federal Controlled Substances Act, growing, producing and even selling and possessing marijuana is “100 percent illegal.” That would mean that, in theory, under the Bank Secrecy Act, banking with these companies would be illegal for the financial institution and could constitute money laundering for the seller.

What makes it more complicated is multiple “guidances” released by both the Department of Justice and the Department of Treasury about the enforcement of marijuana-related business taking place in states that have legalized the drug in one way or another.

Under the Obama administration, the Department of the Treasury’s Financial Crimes Enforcement Network in 2014 released a guidance that indicated banks can probably avoid being punished for working with marijuana-related businesses in states that have legalized the use of the drug.

All the banks have need to do — according to the guidance, which isn’t a law and does not guarantee immunity from prosecution — is take appropriate steps to gather information about licensing and enforcement in their state and routinely monitor for suspicious activity. The catch: The Trump administration hasn’t yet clarified whether or not it will honor the 2014 guidance, but it has said to expect greater enforcement of marijuana laws.

The effect of the murkiness with regard to the feds? Banks don’t want to deal with it and, Schain added, the financial return for some isn’t significant enough to risk not being compliant. Some major banks in Pennsylvania have already said they’ll refuse to do business with medical cannabis growers and sellers, making basic transactions like payroll and taxes quite a bit more complex for those trying to open a marijuana-related business.

Unfortunately for Pennsylvania businesses, there’s little the state can do on this front. Most of the regulations when it comes to banks (which are federally insured) come straight from the feds, according to Steve Hoenstine, a spokesman for Pa. Sen. Daylin Leach, the Montgomery County Democrat who was a prime author of Pennsylvania’s medical marijuana law.

Hoenstine said banking wasn’t addressed at all in the state law “because it’s almost entirely federal” and “there’s no state role in enabling [medical marijuana] companies to use the banking system.” But he said it was a major topic of discussion at a Leach-organized conference last summer, where companies outside Pennsylvania discussed how they found ways to work around federal restrictions to some success.

Though marijuana-related businesses likely can’t work with the PNCs and the First Nationals of the world, there are smaller banks, credit unions and similar financial institutions that will work with marijuana-related businesses. They’ll be few and far between in Pennsylvania as the state continues to get its medical marijuana program off the ground.

There is a possible saving grace for Pennsylvania marijuana-related businesses: The United States Congress. In April, a bipartisan group of representatives introduced the Secure and Fair Enforcement Banking Act, a bill that’s lagged in Congress in years past. The bill would create protections for financial institutions that provide services to marijuana-related businesses.

Then last month, a companion bill was introduced in the U.S. Senate by a group of nine senators. Seven are Democrats, while the two Republican co-sponsors are Sen. Rand Paul, a libertarian-leaning conservative, and Sen. Cory Gardner of Colorado. According to Schain, the bills have a higher chance than ever of passage, as legalized marijuana in some form has expanded to reach 29 states and Washington, D.C.

With more than half of states having some form of legalized cannabis, the pressure on Congress is mounting. Lucky for marijuana business owners, things in this industry move quickly.

“Marijuana is a really weird business,” Schain said, “in that one year in the legalized marijuana industry is like seven years in another industry.”

Anna Orso was a reporter/curator at Billy Penn from 2014 to 2017.