Bank of Denver to close all medical marijuana accounts: Cherry Top Farms bust a factor?
One of the biggest issues for medical marijuana entrepreneurs is the shortage of banks willing to take their money. Most used Colorado Springs State Bank until September 30, when its MMJ accounts were dropped. And now, The Bank of Denver, where other businesses had found refuge, is doing likewise -- and a dispensary owner says the decision was prompted by the recent raid at Cherry Top Farms.
The owner, who asks that his name not be used, says The Bank of Denver was the sixth that's "kicked me out" -- the previous one being Colorado Springs State Bank. He understands that such facilities are anxious about working with MMJ operations, since marijuana remains against federal law, and banks are federally regulated. Nevertheless, "I've never made up any stories," he stresses. "I've told them exactly what I do, because my goal is to be 100 percent forthright about this legal business."
So why did The Bank of Denver decide it didn't want his moolah anymore? From what he's heard, the move was connected to "the bust that happened at Cherry Top Farms."
As we've reported, the Cherry Top Farms dispensary was raided last week by Drug Enforcement Agency officers, among other law-enforcers, with more than 2,500 plants and many other products taken. Why? The feds had been conducting surveillance operations on Nathan, Ha and Hai Do over an unlicensed, permit-free grow facility the feds had already taken down once before. Just as search warrants were about to be executed, a truck filled with plants left the grow, and agents followed it to Cherry Top Farms. And while CTP wasn't the target of the investigation, agents were required to seize all of the marijuana there in addition to what was in the truck.
"Cherry Top Farms was one of The Bank of Denver's biggest depositors," the anonymous owner says. "And their feeling was, if this is what can happen to one of their biggest depositors... well, they got very scared."
Cherry Top Farms during last week's raid.
Which explains the phone call the owner received yesterday, informing him that The Bank of Denver had decided to close all its medical marijuana-related accounts.
Rumors that the accounts would be shut down as of October 31 don't jibe with what the owner was told during that conversation: He was informed he's got until January 3, 2012. But that's still a short amount of time to get his financial house in order somewhere else.
What to do? Some dispensaries are going cash only, but he doesn't see this approach as a viable option. "If we want to be 100 percent transparent, how can you be transparent in a completely cash business? I'm a little leery of that. I don't want to be in a situation where my credibility can be second-guessed."
With that in mind, he'll likely make an arrangement with "an online bank" as a stopgap. In the meantime, though, he's been in contact with Senator Pat Steadman, who'd tried to get language about investment funds into HB 1043, the so-called medical marijuana cleanup bill. (This passage was removed even before U.S. Attorney John Walsh raised objections to it.) "He has agreed to sponsor a bill to get a bank chartered specifically for the medical marijuana industry," he says.
In the short term, though, he describes The Bank of Denver's decision as, quite simply, "a disaster."
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