New York’s medical cannabis industry is scheduled to launch at the beginning of 2016, but the five state-sponsored cultivation and distribution operations charged with supplying patients with cannabis products may have to do so without the use of a bank account.
A recent report indicates that none of the major players in the banking world have any plans to fraternize with companies whose business model includes selling marijuana. Although none of these banking institutions seem to have an moral opposition to the cannabis industry, most feel it is simply necessary to stay removed from these types of business deals until the federal government makes some concrete policy changes towards its ban on the substance.
“While the use of medical marijuana is legal under applicable state laws in some states, the manufacture, distribution, and use of marijuana is still illegal under federal law,” a spokesman for Wells Fargo said. “Our policy of not banking marijuana-related businesses is based on applicable federal laws.”
There are some concerns that with several of the largest banks in New York – PNC Bank, JP Morgan Chase, TD Bank and Key Bank – refusing to play the marijuana game, no debit cards will be allowed and everyone involved will be forced to deal in cash-only trade. This is a conundrum the industry is experiencing in the 22 other states and the District of Columbia where corporate banks are not supporting medical marijuana.
The good news, however, is not every financial institution is treating the medical cannabis industry as a pariah of the state. Over the course of the past year, reports that suggest smaller credit unions are allowing cannabis businesses access to basic banking services, like deposit capabilities and checking accounts.
Unfortunately, since there is an elevated risk of these banks getting busted for money laundering, all marijuana-related accounts are typically subjected to enormous fees – some in upwards of $3,000 per month for a basic checking account.
In an email from Columbia Care, one of the five business set to provide cannabis for patients in New York, the company said that not only were they on the verge of striking a deal with a bank, but “like our operations across the country, more than half of our transactions in New York State will be electronic via cashless ATM/debit cards.”
Others medical marijuana businesses in the state report that they, too, are working with banks to ensure they are not operating on a cash-only basis. There is no word yet on which banks have stepped up to offer their services.
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