Nearly all big-name banks and major merchant-services providers (the third parties who handle credit-card transactions) refuse to do business with marijuana dispensaries, grow operations and other state-legal cannabis firms that deal directly with the plant. The result is a multi-billion dollar industry, acting as an all-cash business.
For cannabis companies, this means state and federal tax bills paid via shopping and garbage bags full of high-denomination bills. For the financial institutions who do dare to delve into the lucrative world of providing banking services to the weed sector, it means total secrecy.
Until recently, some cannabis businesses had been able to process credit and debit-card payments via next-generation financial services providers like Square and Paypal. You can credit president Donald Trump and Attorney General Jeff Sessions for ending that era.
As Inc. is reporting, the mere threat of a federal crackdown on state-legal marijuana is leading these firms to “purge” their client base of anything “remotely” marijuana-related.
As per Inc.’s Will Yakowicz:
Shanel Lindsay, the founder of Boston-based startup named Ardent, which makes a decarboxylator, a device that lightly cooks cannabis flowers to be used in edibles, says she has been bounced from PayPal, Square, Stripe, and at least four other payment processors. Lindsay says she missed a total of three weeks in sales while waiting to be approved by an offshore payment processor during the first two months of Trump’s presidency.
“Everyone running an ancillary business got kicked off all at once,” says Lindsay. “It was an unrelenting wave; you could not deny it. All of the banks seemed to be highly attuned to the issue and there was no flying under the radar.”
As has been thoroughly reported, America’s current attorney general is an avowed foe of all drugs — but AG Sessions has special place in his Deep Southern-strategy heart for cannabis: Sessions has compared marijuana unfavorably to heroin, has sought counsel from state attorneys general who have (so far unsuccessfully) sued Colorado to stop its $1.3 billion in annual legal marijuana sales — and, last year, famously revealed his hand when he declared that “good people don’t smoke marijuana.”
(He also is reported to have “joked” that the Ku Klux Klan were OK people until he found out they smoked weed, so there’s that.)
Despite all the bluster, Sessions has yet to present a plan to crack down on state-legal cannabis, or even make a direct, cohesive threat. But the mere idea of some Justice Department-led anti-cannabis crusade has been sufficient to scare financial-services providers away, Inc. reported.
And this time, it’s not just cannabis companies: it’s cannabis-related companies. Vaporizer manufacturers, accessory producers and other providers of gear and services to marijuana — none of which actually touch the plant — have seen their accounts summarily shut down.
Spokespeople for Square and other companies told Inc. that the feds’ ominous warnings had nothing to do with what the “mass purge” of cannabis companies from their platform — don’t buy that for a second.
Industry experts believe that Sessions’s saber rattling — and White House press secretary Sean Spicer’s equally vague comments warning about “greater enforcement” — had everything to do with payment companies self-regulating and saying goodbye to their marijuana-related business all at once.
Several members of Congress have introduced legislation that would explicitly allow marijuana firms to open bank accounts and behave like legitimate taxpaying businesses rather than Miami Vice-era drug lords.
With eight states having legalized commercial sales of marijuana, there is more support than ever before in America for a commercial pot sector — yet with Sessions in charge, there is also more uncertainty now than at almost any time over the past decade.
TELL US, should Congress create provisions allowing banks to service state-legal canna-business?