Banking Still A Hurdle For Marijuana Entrepreneurs

By Alison Bosma
MetroWest Daily News, Framingham, Mass.

WWR Article Summary (tl;dr) Even with an account, many banks won’t give loans or lines of credit to marijuana businesses, which means many cannabis entrepreneurs have to borrow money from friends and family, find an investor, or already have the capital.

MetroWest Daily News, Framingham, Mass.

What sort of issues crop up when your industry is locally legal yet federally prohibited, as is the case with marijuana businesses?

Banking issues.

“The banking problem is probably the most challenging hurdle for entrepreneurs who want to be involved in legal cannabis,” Marijuana Business Association Executive Director David Rheins said, “essentially because of Schedule I.”

Schedule I is a federal Drug Enforcement Administration designation of drugs that are illegal to possess, use or sell, except in specifically approved circumstances. Despite medical legalization in multiple states, the federal government still classifies marijuana as a Schedule I drug.

Where do banks come in? Because most financial institutions are federally insured and operate under federal regulations, marijuana industry professionals say managers want nothing to do with a federally illegal drug, no matter what local authorities have ruled.

“Even as a landlord, local banks (wouldn’t) take my money generated by a marijuana business,” Colorado businessman Serge Chistov said. “I’m talking about money for rent.”

Chistov was the landlord of a building in Oak Creek, Colorado, that held the Honest Marijuana Company. Colorado made recreational marijuana legal in 2012. He said five out of seven banks wouldn’t accept the company’s rent checks. Eventually, Chistov became an investor in the company.

Jaime Lewis was kicked out of nine banks over more than a decade, as she tried to find her footing in the marijuana business.

“They legitimately shut down my account two days before payroll,” Lewis said, of a particularly bad experience, with Wells Fargo. “It took roughly four and a half weeks for me to get my money back from them.”

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