“Got to be the banking, we all need to do something with all this cash,” is how Charles Sarge of Cannabase responded when I asked him to name the biggest short-term policy need of the industry. This basic problem was constantly raised at the Cannabis Business Summit in Denver this week. It was a core part of the planned presentations and by far the most frequent answer when I asked attendees about their most pressing needs. Some conference attendees would even spontaneously bring up the need as soon as I told them I was a policy writer based in D.C.

Legal marijuana is a new, 21st century industry, but it is being forced to handle its finances in a way that is more reminiscent of the 18th century. A 2011 memo from the Department of Justice helped scare banks into closing accounts with marijuana businesses, forcing many to do everything in cash. Many marijuana businesses have had one or more accounts closed, and those that have accounts face the constant threat that they could be closed any day. Scott Van Rixel, the CEO of Bhang, complained to me, “I have to pay my taxes in cash — that is ridiculous. In order for Uncle Sam to get his money, I have to walk into a bank with a big bag of cash.”

This cash-based economy has created obvious risks like robbery, which dispensaries have tried to mitigate with things such as smart safes, but these steps only address some of the troubles caused by not having easy access to regular banking and credit card services.

The strong need for a place for this cash has led to people trying some questionable options. Some companies engage in merchant miscoding to hide what their businesses really do, or set up holding companies with bland names. Others have tried working with shady organizations to put their money in offshore banks. These options clearly create their own legal problems and risk a few bad actors making the industry look bad.

The problem is so serious that Andrew Freedom from the Colorado governor’s office thinks it is the biggest existential threat to the new law, saying, “The shakiness we have is banking.” Fortunately, at least in Colorado, there is a real desire on the part of the government to fix the issue. Freedom said, “We want the cash off the street, we want any solution.”

What that solution or solutions will be is not yet clear. Earlier this year the Financial Crimes Enforcement Network released a fairly cryptic memo outlining how banks might take these accounts by filing special paperwork with each transaction, but so far almost all banks remain scared. In Washington State there are two credit unions, Numerica and Salal, who think the memo offers enough protection and are taking only certain types of local marijuana accounts. That could help parts of Washington but doesn’t fix things for businesses in other states.

At the state level the Colorado legislature did approve a law that would allow the creation of uninsured financial cooperatives for the industry, but there are technical questions about the idea’s ultimate viability. On the federal level, Reps. Ed Perlmutter (CO-07) and Denny Heck (WA – 10) have introduced legislation to actually fix the problem, but its path forward is uncertain.

At the moment, the best hope may be that if these braver financial institutions face no problems from openly taking marijuana accounts for a few months, enough others will follow suit to meet the industry’s most basic needs.

For now, it remains both a big fiscal problem for the industry and one of the most serious threats to the reform movement, since it prevents the marijuana market from realizing the complete benefits of legalization. Completely moving the industry out of the dark, making its transactions fully tracked, and keeping the industry safe from crime won’t fully happen until this problem is solved.

Jon Walker is the author of After Legalization: Understanding the future of marijuana policy

Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at http://pendinghorizon.com