It's Legal To Sell Marijuana In Washington. But Try Telling That To A Bank.

LINDA WERTHEIMER, HOST:

Voters in the states of Washington and Colorado have approved measures legalizing marijuana for recreational use. That means there should be lots of new, licensed businesses opening in those states, selling cannabis. These brand-new businesses are going to need banks, to deposit their earnings. Chana Joffe-Walt, with our Planet Money team, has been wondering: How is that going to work?

CHANA JOFFE-WALT, BYLINE: If you walk into any bank and say you're opening a business, you will likely get a seat across from a guy like Todd Pietzsch, at BECU in Washington state, selling you...

TODD PIETZSCH: We could certainly offer you a business checking account; potentially, a line of credit, maybe even a loan - depending on what your needs are.

JOFFE-WALT: And what if I tell you that my business is to sell marijuana?

PIETZSCH: Then we would say unfortunately, at this point in time, we're unable to establish a commercial business account for you.

JOFFE-WALT: Pietzsch says the problem is that selling marijuana may be legal in Washington state, but it's still a federal crime. He just doesn't know if that kind of account would get his bank in trouble. BECU is actually a credit union; and I thought because they only operate in Washington state, they may put more weight on state law than - you know - a big, national bank would. But Pietzsch says, we're federally insured. It's just too big a risk.

So I went as local as I could find - Islanders Bank, serving customers only in one, tiny corner of Washington state.

BRAD WILLIAMSON: We're on the San Juan Archipelago. We are the definition a small, local bank

JOFFE-WALT: But Brad Williamson, the CEO, told me: If we did open accounts for licensed marijuana businesses, we just don't know whether the feds would come after us.

WILLIAMSON: The risk to reward - I mean, say the feds don't do anything. OK, so you've got yourself a customer; hopefully, a good customer. But as a banker, dang - you know? I mean, you're on the hook if you're doing business with people that are doing illegal activity. I mean...

JOFFE-WALT: But it's not illegal now.

WILLIAMSON: It's not illegal in Washington state.

JOFFE-WALT: And we're back where we started. Still a federal crime; he says no. So we have Colorado and Washington state deciding they want legal marijuana. And those states will probably license hundreds - maybe thousands - of marijuana sellers, growers, distributors. What are these businesses going to do, just operate all-cash, like drug dealers? Which, I guess they are. I asked a drug dealer: How does that work?

JOHN DAVIS: Well, you're going to want to figure out a good way to have money orders, that sort of thing.

JOFFE-WALT: John Davis already has the problem that future marijuana businesses are going to have. He sells medical marijuana in Seattle. Medical marijuana is legal in Washington state. But John says he has a really hard time finding a bank willing to work with him - which, he says, causes all sorts of problems.

DAVIS: OK, so with your vendors, OK, your vendors are supplying you with cannabis. You're paying that in cash. What that does - firstly - is, it puts you at risk of robbery.

JOFFE-WALT: Payroll is a mess. It's impossible to order supplies, Davis says - baggies, lights, display cases - without a business credit card. Sometimes, PayPal can work; but not for some things.

DAVIS: How do you pay your taxes? You know, there's sales tax. You can't go into the DOR - the Department of Revenue - and, you know, give them a wad of cash.

JOFFE-WALT: Davis has learned a bunch of tricks for operating an all-cash business. He teaches a course about this, called "Canibusiness." But in the end, Davis says, a marijuana seller's best option is really not a great option at all. Go to the bank, and do what he did.

DAVIS: Just didn't tell them the details of my business. When asked what we do - well, we make money. (LAUGHTER)

JOFFE-WALT: Davis says he doesn't feel great about toying with the truth. But, he says: I have a legitimate business. I need a bank.

Chana Joffe-Walt, NPR News.

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