MBank Drops Colorado Cannabis Accounts After 1 Week

Business
MBank Drops Colorado Cannabis Accounts After 1 Week

The Oregon bank that tried to court Colorado cannabis industry funds has decided that it bit off more than it can chew. After only a week, MBank is closing all of its marijuana accounts. The bank is publicly stating that it does not have the infrastructure to handle the overwhelming response for service. According to state licensing data, there are almost 2,200 marijuana grow, manufacturing, and retail businesses in Colorado. MBank took on exactly five of these before they tapped out.

MBank officials have admitted that their lack of a physical Colorado branch was part of the cannabis banking program's downfall. In absence of a brick and mortar Colorado branch, millions of dollars in cash deposits (cash that must often be sprayed with Febreeze or other cleaners to eliminate the strong marijuana smell) would have to be made at a Federal Reserve Bank, then credited to the MBank accounts. MBank has three locations in and around the greater Portland area. They almost had to shut their doors in 2009 due to a string of bad loans and business decisions.

Since MBank went public with its desire to enter the Colorado cannabis sector, many were doubtful the venture would be sucessful.  It has long been the norm for banking regulators to frown on institutions that are open about working with the marijuana industry in general. 

Colorado Springs State Bank was the last bank in the state to openly work with the cannabis industry. They were forced to close around 300 accounts in 2011 due to allegations of working with companies that violate federal law.