SPRINGFIELD — Even after the state implements rules for the sale of medical marijuana, federal banking regulations could make Illinois’ budding cannabis industry a cash-only operation.
While the state has moved to legalize using marijuana for certain medical conditions, federal regulations prevent marijuana dispensaries and related businesses from using federally-insured banks.
“What it means for a lot of businesses is that they’re forced to operate entirely in cash,” said Taylor West, dep-uty director of the National Cannabis Industry Association in Washington, D.C. “That’s not just the sales side. It also affects the business side.”
Unable to open a checking account or get approved for a credit card, many dispensaries in other states have to pay their bills, manage their payroll and pay taxes with enormous sums of cash.
“Often they have to pay these things in bags of cash or convert them into money orders,” West said. “They have to move a lot of cash, and that creates a lot of risk for staff and public safety... and it really creates a situation that’s unsustainable.”
Last August, Gov. Pat Quinn signed a law authorizing a pilot program to legalize medical marijuana in Illinois. The stan-dards for access have been called some of the strictest in the nation, but officials are still working out the finer points of the law’s implementation.
Last week, public health officials released draft rules for the program that would require patients to provide the state with fingerprints, un-dergo a background check, pay $150 annually for a special photo ID and surrender their FOID cards.
But the continued federal prohibition of marijuana has created issues for vendors in states where it’s legal. Feder-ally-insured banks could face serious consequences from the Justice Department for violating federal statutes that prohibit drug trafficking and money laundering.
“So the idea is that banks are required to report suspicious activity, and that includes banking activity,” said West. “There’s nothing that clarifies that (the rule’s) not intended for legal businesses.”
State Sen. Jason Barickman, R-Bloomington, said the prob-lem illustrates why he opposed legalization when it was first proposed.
“It’s as if the majority who supported this bill shrugged off the fact that this is prohibited by federal law,” he said. “What’s most concerning to me is that we would appear to be enacting an entire bureauc-racy in our state for one drug and in doing so, we’re ignoring all of the implications that this would have on a federal level.”
State Rep. Lou Lang, D-Skokie, isn’t sold on that ar-gument.
“I would say that’s a feeble excuse for not improving the lives of thousands of sick peo-ple,” he said. “It didn’t bother 20 other states and there’s no reason Illinois can’t take care of its sick people.”
Lang, who sponsored the medical marijuana measure in the House, added that the safety concerns might be over-blown.
“While there is a risk, I’m not hearing a whole bunch of stories about thieves or other criminals causing a lot of havoc,” he said. “Maybe it’s happening, but I haven’t heard anything. It is what it is. We can’t change federal law here in Illinois.”
Dispensaries aren’t the only ones affected by the regulation, either. West said businesses that work with the marijuana industry, like insur-ance companies or grow-light manufacturers, also could fall under the same restrictions.
Even West has had run-ins with the regulation.
“When we applied, my or-ganization was turned down for a credit card,” she said. “It was because we had ‘cannabis’ in our name, frankly.”
She added the gap in the law can only be rectified at the federal level, and that, while no concrete progress has been made, officials in Washington have begun talking about the issue.