LAS VEGAS (KSNV & MyNews3) -- Anyone wishing to open a medical marijuana dispensary needs a lot of cash, but they can't get it from the place most people go for loans.
Many banks are staying away from doing business with the medical marijuana industry for fear of repercussions.
Marijuana is still considered a dangerous drug by the feds, and since it's still illegal to distribute marijuana at the federal level, the banks are staying away.
For entrepreneurs who want to open up a medical marijuana dispensary, the road is a tough one.
They have to obey a stack of rules governing everything from where they can be to how they can operate.
Starting a business means needing cash, and would-be dispensary owners don't have many options, since banks aren't doing business with the medical marijuana industry.
“The legal and regulatory aspects of it are still somewhat uncertain and we're not quite sure how that's going to impact the financial operations of those businesses,” said Brad Beal, resident of One Nevada Credit Union.
Beal says the growing industry is still plagued by unanswered questions, and banks have decided to hold off for now.
“The medical marijuana business is just so new and there's so much uncertainty about it. We've decided to kind of sit on the sidelines a while and kind of let it develop a little further and mature a little further before we make any decisions one way or the other,” Beal said.
Wells Fargo Bank sent a statement regarding medical marijuana businesses.
Their concern is that marijuana is still illegal at the federal level.
“The manufacture, distribution and use of medical marijuana is legal under applicable state laws in some states, the manufacture, distribution, and use of marijuana is still illegal under federal law. Our policy of not banking marijuana-related businesses is based on applicable federal laws,” reads the statement.
Last month the Obama administration released guidelines for banks allowing them to set up accounts and offer loans to legal marijuana business owners.
The announcement did nothing to change the drug's status as illegal in the eyes of law enforcement.
Beal has other concerns as well.
“Even though they've issued some regulatory guidance on it, we're still a little bit concerned about the economic impact and just how these businesses are going to operate and what their financial results might be,” Beal said.
Many banks are being very cautious when it comes to marijuana. Those wanting to get in to the business have to look elsewhere for financing for now.