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Restricting Cannabis Access to Banking is Discriminatory

October 06, 2022


  • Criminalizing cannabis has a long history, from Prohibition to the War on Drugs.
  • Because of the current lack of banking, 401(k) access, and other legislation, the stigma persists, even in states where cannabis is legal.
  • However, progress continues with more states opening their doors to cannabis businesses and some financial institutions providing services in the industry.


Although the cannabis industry is highly profitable—and some form of cannabis is legal in 37 states—traditional banks generally won’t work with cannabis companies because banks are federally-regulated and fear negative consequences.

This causes a long list of hurdles for new and established cannabis companies, including all-cash business dealings that put employees in the way of armed robberies and the inability to offer retirement benefits that allow cannabis companies to compete in the employment market.

But let’s not beat around the bush: denying an entire legal industry access to banking is just another chapter in a long history of unfair treatment toward those who associate with cannabis.

Long History of Stigma

For millennia, mankind utilized cannabis for medicinal benefits and more, with little concern. Even when hemp finally made it to America in the 1600s, colonists were encouraged—even required­—to grow it.

“Between 1850 and 1937 marijuana was widely used throughout the United States as a medicinal drug and could easily be purchased in pharmacies and general stores,” reports PBS.

“In the 1930s, Prohibition was repealed in the middle of the Great Depression. Straight-laced bureaucrats looking for another target turned their attention to marijuana," reports History. By 1937, marijuana was outlawed in the United States based on racial tensions and politics, thus cementing the racially-motivated cannabis stigma that persists today.

How the Stigma Persists

President Nixon’s War on Drugs, a government-led initiative designed to combat illegal drug use through increased policing and incarceration of drug offenders, continues today.

This initiative has long since disproportionately impacted low-income communities of color through discriminatory enforcement of drug laws that’s led to the imprisonment of millions of Black Americans, often for non-violent marijuana offenses.

Still, the over-policing of drug-related crimes continues, despite evidence that incarcerating drug offenders has shown to have little impact on rates of drug misuse. As a result, the U.S. deals with several unintended consequences, including an expensive incarceration crisis, and thousands of cannabis convicts who struggle to find secure employment, build savings, and live normal lives.

How Cannabis Stigma Affects Legal Businesses

Denying cannabis companies access to federal banking is just another brick in the wall of cannabis stigma, and yet another act of discrimination against low-income people of color and “undesirables” egregiously maligned for cannabis use in a world that is now actively legalizing the drug.

Restricting banking for cannabis companies forces them to continue to engage in behaviors that make the industry appear dangerous and criminal—and that makes them sitting ducks for actual crimes like armed robberies.

“It makes absolutely no sense that legal businesses are being forced to operate entirely in cash, and it's dangerous — and sometimes even fatal — for employees behind the register," Washington Sen. Patty Murray, the third-ranking Democrat in the Senate, said in a statement emailed to The Associated Press.

What’s more, one of the few places those with prior cannabis convictions can work after getting out of prison is in the cannabis industry. In fact, it is not uncommon to see states employ “social equity” initiatives to attract and hire ex-convicts, particularly those people of color impacted by the War on Drugs.

So, by continuously denying this industry access to banking and employees’ access to benefits like payroll systems and 401(k)s, the federal government is forcing cannabis companies to perpetuate appearances of illegality and denying opportunity, safety, and financial security to the same people who’ve been unfairly impacted by cannabis stigma all along—low-income communities and communities of color.

Has This Discrimination Against Cannabis Businesses Improved?

Because of the growing support for recreational and medicinal cannabis in the past two decades in America, the stigma has been reduced, yet even if cannabis was federally legal right now, serious stigma continues to linger. While the majority of U.S. citizens support federal cannabis legalization, the government is slow to adapt to this growing cultural shift.

However, many are using their positions to advocate for cannabis businesses and spread awareness of the discrimination they face.

One tactic is offering cannabis licenses first to the communities that have been disproportionately affected by the stigma and war on drugs. New York is the first to do this, although infrastructure still needs to be put in place before these individuals can begin selling.

Another is to offer financial benefits like 401(k)s to legal cannabis businesses despite the red tape and current complexities. While there is extra work involved, granting cannabis businesses access to retirement planning and banking is pivotal to eliminating the stigma.

Additionally, retirement benefits allow employees to save for their future and businesses to save money in tax credits and temper the cannabis industry's high turnover rate. Without consistent access to retirement plans like other businesses, the cannabis industry is at a disadvantage.

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