Banking Proves Problematic For Green Entrepreneurs

By D.E. Smoot Muskogee Phoenix, Okla.

WWR Article Summary (tl;dr) Different states where marijuana is legal in some form or another have approached the issue of banking differently. One industry expert says that in states that are "more business friendly, people involved in the cannabis trade are relying on credit unions and local banks that have no ties to the Federal Deposit Insurance Corporation.

Muskogee Phoenix, Okla.

Members of a limited liability company who hope to open the first medical marijuana business in Muskogee found themselves without a bank just days after the state issued licenses for growing and dispensing the product.

Sherri Lewis said they were told the bank would no longer service their personal accounts or those associated with businesses that have no connection to the medical marijuana enterprise. Lewis and her husband, Wesley Lewis of 220 Farms LLC, were given about a week to withdraw their money and close their accounts.

"Our goal in this industry is to bring money and jobs to where we live, not take it away," Sherri Lewis said, acknowledging her awareness of the federal marijuana prohibition that bars most banks from work directly with green businesses. "But if I can bank in another state with no backlash, then that may be something we have to look at doing."

Lewis said she knows people who work in Colorado's cannabis industry who have found banks to service their personal accounts. Statements issued by the Oklahoma Bankers Association indicate that may be unlikely here for the most part.

State banking representatives say the question keeps coming up, but there is no clear guidance for bankers.

Different states where the marijuana is legal in some form or another have approached the issue differently. The questions keep coming up, and various states in which marijuana is legal in some form are taking different approaches to it.

"As this issue evolves, we'll make certain to keep bankers informed," OBA President and CEO Roger Beverage said in a public statement. "But moving along legislation through Congress that will establish what banks can and can't do is a going to be a process -- and probably a lengthy one -- rather than an event."

Steve Gormley, chief executive officer of International Cannabrands, a publicly traded cannabis products licensing company, described Lewis' banking situation as "typical" and said it "happens quite a bit."

Gormley, considered an expert in the legal marijuana industry, said he has been shunned by six or seven U.S. banks that learned about his ties to the publicly traded company that generates revenue by licensing brands to those involved in various sectors of the cannabis trade where it has been legalized at the state level.

"We still have federal prohibition in place even though we know there is an eventuality there will be a repeal of the marijuana prohibition," Gromley said. "There are banks just itching to come off the sidelines -- nobody is willing to take that calculated risk in the event something will happen."

Gromley said in states that are "more business friendly, people involved in the cannabis trade are relying on credit unions and local banks that have no ties to the Federal Deposit Insurance Corporation. Those banking relationships, he said, are "so subjective" that it really comes down to a person's "relationships" with the bank, "the dynamics of the banker you are using, and the individual branch."

While a bill has been introduced in Congress to address the issues that cause many bankers concern about ties to the cannabis industry, Gromley said is not going to hold his breath.

"If you are waiting on Congress, I have a bridge in Arizona to sell you," Gromley said. "There is no rhyme or reason to it ... it is what it is."

Lewis said she has visited with a lawyer in Tulsa who has been working with the state banking association. In the meantime, she said they will try and find another bank to serve their personal accounts.

"We totally understood the risk of no banking, especially at first," Lewis said. "But (to close) our other businesses and personal account to pay our bills is ridiculous and a shame."

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