There is an old jest that says the fastest way for a business to run off its customers is to adhere to the motto, “In God we trust; all others must pay cash.” But for Kimberly Cargile, director of the East Sacramento medical marijuana dispensary, A Therapeutic Alternative, cash and carry is her only option. And it really is no laughing matter.

“We’ve had quite the difficulty getting access to banking,” she says. “We have to pay all of our bills and our taxes in cash. Even getting change from the bank is tough, because the cash we have on hand is kept in the safe with the medicine [cannabis] and when you get it to the bank, it smells of that so the bank becomes very suspicious.”

In 2014, the Financial Crimes Enforcement Network issued guidelines that gave banks a pathway for dealing with marijuana businesses. Those include a requirement that banks and credit unions ensure their marijuana clients are obeying their state laws and notifying federal authorities of any suspicious transactions.

While businesses like the one Cargile operates are perfectly legal under California law, her story is hardly unique. Marijuana’s status as a federally banned drug means most banks, fearing legal retribution that could cost them their charter, won’t come near her money with a 10-foot bong.

In 1996, California became the first state to legalize medicinal marijuana use. Since then, 22 more and the District of Columbia have followed suit. Four of those and the District also now allow adults to use small amounts strictly for recreation. More may soon follow as advocacy groups like the National Organization for the Reform of Marijuana Laws expect legalization ballot measures in up to eight states next year, including California.

The motivation is simple: money. According to a report last year by The ArcView Group, a research and investment firm in San Francisco, the cannabis industry grossed $2.7 billion in 2014. That’s a 74-percent jump from 2013, and the numbers are poised to grow as more states and cities come on board. ArcView predicts that as many as 18 states could pass recreational use laws by 2020, driving cumulative annual revenues as high as $10.2 billion.  

Much of that is predicated on what might happen in California next November. Well over a dozen ballot measure have been submitted to the Secretary of State’s office for review, though most observers believe only one or two will make the ballot. Whatever the number, with polls showing a majority of Californians support legalization, proponents feel confident the Golden State may soon be going green. If so, the ArcView report suggests the bucks will only get bigger.

“Should an adult-use legalization initiative pass in California in 2016, the entire industry could rapidly double in size,” it concludes. Another study by New York-based Green Wave Advisors is even more bullish on the so-called “green rush” economy, saying in an October 2014 report that nationwide legalization could push combined retail marijuana sales to over $35 billion a year.

In most industries, that kind of revenue would be a fantasy come true. But without access to the banking services that most businesses take for granted, all of that money is kind of a buzzkill. And the problems associated with that go far beyond a dispensary owner having to pay debts in small bills reeking of weed. Cash-heavy pot operators are ripe targets for criminals, forcing most dispensaries to spend tens of thousands of dollars on high-tech onsite security. Customers must also carry cash, making them targets as well.

It’s not always such a good deal for the government, either. With no electronic money trail to follow, spotting illegal activity — like actual money laundering or the underreporting of income to avoid taxes — is problematic. The California Board of Equalization estimates that only about a quarter to a third of legal medical marijuana dispensaries comply with all of the state’s tax laws.

But there is good reason for banks to be wary. The federal government still classifies marijuana as a Schedule 1 drug, the same as heroin and cocaine. That makes it illegal for banks to knowingly do business with someone who sells pot for a living, even where medical or recreational weed is legal.

The U.S. Department of the Treasury has sought to mitigate the problem. In 2014, the agency’s financial enforcement arm, the Financial Crimes Enforcement Network, issued guidelines that gave banks a pathway for dealing with marijuana businesses. Those include a requirement that banks and credit unions ensure their marijuana clients are obeying their state laws and notify federal authorities of any suspicious transactions. More directives have followed, including one from the Department of Justice to U.S. attorneys ordering them not to prosecute banks, as long as they adhere to federal guidelines.

But most banks remain unconvinced. Beth Mills, vice president for communications and marketing for the California Bankers Association, says that is because the DOJ has also made it clear it will prosecute banks that do not strictly adhere to those guidelines.

“They’re saying, ‘Go ahead and do it, but if you make a mistake we’ll pull your charter,’” she says. “It makes banks extremely leery of doing business with those companies.”

Some banks are risking it, though how many is unclear. FinCEN says less than 200 banking institutions nationwide — mostly small community banks and credit unions — are working with marijuana retailers. Fearful of being overrun with desperate pot retailers, most institutions that do work with dispensaries aren’t exactly advertising their services.

“Banks that are handling these accounts are doing so very quietly,” says Taylor West, deputy director of the National Cannabis Industry Association.

Many are aware of the experience of MBank, a small community bank in Gresham, Ore. that sought to focus on the legal pot industry. President and CEO Jef Baker said the bank had about 75 marijuana clients in Oregon and Washington. It was also exploring operations in Colorado, but complying with the litany of federal requirements ultimately proved to be too much. In April 2015, MBank announced it was getting out of servicing the weed industry.

“When we started out, we had a concept of how it would be,” Baker says. “But the expectations and demands on our resources became too intense.”

“Banks that are handling these accounts are doing so very quietly.” Taylor West, deputy director, National Cannabis Industry Association.

Because financial institutions are largely regulated by the federal government, states are limited in what they can do to ease this situation. Colorado took action in 2014, passing legislation to create a state-chartered credit union geared specifically to handle the legal pot industry. But the U.S. Federal Reserve requires banks that want to process checks and credit cards to have a master account with them. The first financial institution created under the new Colorado law, Fourth Corner Credit Union, applied for an account in December 2014. After months of silence, the Fed rejected the application last July, citing marijuana’s illegality under federal law. Fourth Corner has since filed suit, seeking to force the Fed to grant them the account.

Colorado is not the only state anxiously awaiting the outcome. Last September, California Assemblyman Jim Wood, a Democrat whose district includes the weed-growing mecca of Humboldt County, introduced legislation to follow Colorado’s lead by creating the State Cannabis Credit Union within the Board of Equalization. Lawmakers will consider the measure this year.

A host of private sector entrepreneurs are offering other options. One is CannaNative, the brainchild of a trio of Native American businessmen in Southern California. It seeks to unite over 550 Western tribes into the cannabis business. In a statement, CannaNative co-founder Anthony Rivera says the tribes would use their expertise in running casinos on sovereign land to set up financial services for weed dispensaries.

“CannaNative will usher a new age for sovereign nations, as Native American tribes have unique rights that allow for cannabis (marijuana and industrial hemp) cultivation, manufacturing, marketing, sales, use, distribution, medical research and even banking institutions for the rapidly growing cash-and-carry industry,” Rivera’s statement reads.

But some close observers have their doubts.

“I don’t see how they would have the leeway to do something like that,” says Khurshid Khoja, the founder of Greenbridge Corporate Counsel in San Francisco, which represents numerous clients in the cannabis industry. “Even with tribal sovereignty, there are things they can’t do. I just question how much leeway they would have to exempt themselves from federal anti-money laundering laws.”

The answer is very little, according to Brian Pierson, an attorney who specializes in working with Native American tribes at the law firm Godfrey and Kahn in Milwaukee, Wis.  

“Certainly there is tremendous need in Indian country, and it’s fair for tribes to explore every potential means for economic development,” he says. “But with respect to commercial activity focused on non-Indians living off-reservation, there is no judicial authority for immunity or exemption from federal law.”

Technology may hold better possibilities. Companies like the Denver-based FlowHub and Integrated Compliance Solutions in Las Vegas each offer “seed-to-sale” accounting and point-of-sale solutions that allow cannabis dealers to meet strict DOJ and FinCEN guidelines. California-based Hypur, meanwhile, promotes software it claims can almost fully automate the compliance process for banks, thus drastically reducing the time it takes to service a marijuana client.

But technology does not by itself solve the basic problem facing financial institutions who work with cannabis companies.

“At the end of the day, it is still the bank’s responsibility to make sure there’s no mistakes made with one of these accounts,” says Mills.  

That is why most observers still look to Congress for a final resolution. But the wait has been frustrating. Multiple bills have been introduced, including HR 2076, the “Business Access to Banking Act.” This would grant banks civil protections for managing accounts with legal weed dispensaries. Other efforts would bar federal authorities from using federal funds to go after banks that are obeying state laws. But with an often dysfunctional and hyper-partisan Congress now into an election year, prospects for either measure appear very dim.

Even so, NORML Deputy Director Paul Armentano says the marijuana industry’s rapid expansion is likely to force Congress’s hand soon.

“It is federal law that is preventing these state-compliant businesses from gaining access to financial services, and ultimately it is Congress that has to deal with this issue head on,” he says.

And might California legalizing recreational weed next November become the tipping point for that to happen? At least some observers think so.

“Having California legalize recreational marijuana will absolutely put pressure on Congress to change the law,” says West. “The more members of Congress with constituents impacted by this, the more likely they will act.”

Baker agrees that California’s sheer size could have a lot of influence on what Congress does. But he believes every state should be on board as well.

“Federal drug laws are not really the problem here,” he says. “The real challenge is that banks are being asked to serve as a kind of front-line law enforcement operation monitoring the legal marijuana industry, because banks are the only resource to monitor the business financially. So it would be my hope that every state would increase pressure to help banks get into the system, because they are truly needed.”