What To Do About Marijuana's Mountains Of Cash: This Expert Has A New Approach

Given the well-known banking limitations imposed on cannabis by federal prohibition, cash mountains generated by marijuana sales are becoming an unattended issue. That’s why expert F. Miles Adler of Adler Law Firm and COO of Privateer SCA, Ltd., offers a possible solution for an effective system to handle the billions being generated: third-party certification.

Need For Institutional Design

The argument goes like this: cannabis retailers in legal states have amassed large cash reserves yet it cannot get involved in U.S. banking system, which poses a significant security risk. Large deposits attract criminal activities and, without a proper system, retailers continue to face safety concerns.

Adler points out that creating a regulatory framework across multiple federal agencies will be a lengthy process. Banks will still seek guidance on handling the vast cash reserves from cannabis retailers. Thus, an institutional design for cash management is essential, with or without the SAFER Act.

“Despite the roadblocks that stand in the way of repatriating this money into the banking system, where it can be accounted for, taxed and put to work on behalf of the country, there's a step federal regulators can take now to start a repatriation process: third-party compliance certification.” Adler stated in a recent article in Banking Dive.

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Third-Party Compliance Certification

Adler proposes third-party compliance certification as a viable solution. This system would utilize private security firms to verify the source and ownership of cannabis cash. These sorts of firms already operating in cannabis, provide transportation, collection and warehousing services for cash. Some of them are even run by former military and law enforcement professionals.

These third-party firms could ensure compliance with existing Bank Secrecy Act and anti-money laundering laws. They could also adapt to new regulations from cannabis banking reforms, should Congress pass a related bill in the future. The Treasury Department could guide these firms on handling stranded assets, using forensic accounting methods.

“Qualified by the Treasury Department, these third-party organizations would be equipped with forensic accounting capabilities and legal and financial services expertise. Just as importantly, they would have relationships with retailers and the other companies already in the space,” Adler stressed.

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