Pa. treasurer, others seek to help cannabis industry
Pennsylvania Treasurer Joe Torsella joined counterparts from three other marijuana-legal states this week to request a meeting with U.S. Attorney General Jeff Sessions. The treasurers want to resolve conflicts between state and federal law to pave the way for banking services for cannabis growers and dispensaries.
Despite being legal in 29 states, marijuana still is outlawed by the U.S. government. As a result, financial services for the multibillion-dollar cannabis industry are scant. Credit cards can’t be used for purchases, federally chartered banks won’t take deposits from cannabis businesses and the businesses are left struggling with mountains of cash.
“This is not just a blue state phenomenon, but includes purple and red states in every corner of our country,” said the treasurers of California, Illinois and Oregon in a letter to Mr. Sessions dated Thursday. “A majority of Americans now live in states where they have decided to legalize cannabis.”
John Chiang, the treasurer of
California who is also a gubernatorial candidate, proposed a state bank to serve his state’s legal adult-use cannabis industry.
Mr. Sessions has been vociferously anti-marijuana. On March 20, he signed a memo asking federal prosecutors to seek the death penalty for anyone “dealing in extremely large quantities of drugs.” That sent chills through the community of state-legal marijuana growers and dispensary owners.
Steve Schain, an attorney in Philadelphia with the international Hoban Law Group, said that until the federal government offers clarification, marijuana businesses are hobbled by difficulties faced by no other industry.
“With regards to financial services, marijuana businesses are damned if they do and damned if they don’t,” Mr. Schain said. “Although less than 0.03 percent of American financial institutions have even deigned to provide services to marijuana-related business, more often than not exorbitant fees are imposed, there are insurmountable waiting lists to get accounts, and due to bank mergers and acquisitions, those accounts are closed at the drop of a hat.”
The handful of statechartered banks and credit unions that offer accounts charge monthly fees ranging from $5,000 to $10,000. Because they are forced to be all-cash businesses, marijuana companies are susceptible to robbery. Most pay their taxes with large stacks of cash.
Industry experts estimated that the legal marijuana industry generated $7.2 billion last year. Pennsylvania’s medical program launched in mid-February.
The state Department of Health this month announced it will award a second round of permits to grow and dispense marijuana. In addition, the Keystone State will launch a first-of-its-kind academic research program into the drug with up to eight major health systems. Bills are pending in the Legislature to legalize recreational use, though passage is not likely.
In January, Mr. Sessions rescinded Obama-era documents called the Cole Memoranda that had offered some assurances to state-legal businesses and banks that they wouldn’t be targeted by federal agencies as long as they followed guidelines and remained transparent.
The letter to Mr. Sessions asks him to reconsider.
“There are sound public policy reasons for providing financial institutions and other entities that do business with the cannabis industry some comfort that they will not be prosecuted, or lose access to consumer assets, simply for banking this industry,” the letter read. “Among the policy positives that could result are greater public safety and more efficient collection of tax revenues.”
The absence of guidance, the letter said, “leaves the industry and financial institutions in the dark.”