Legal pot industry says access to banking services essential
Cannabis industry insiders say a push by federal lawmakers to allow banks to provide services to pot shops in states where they are legal “can’t happen soon enough.”
“Access to banking and capital is probably the largest barrier of entry for getting into this industry,” said David Torrisi, president of the Commonwealth Dispensary Association.
As a haze of marijuana legalization has spread across the nation, banks have generally been unwilling to do business with companies that sell marijuana or related products, which are still illegal under federal law.
The cannabis banking bill — passed by the U.S. House of Representatives on Monday — would shield banks from penalties for working with marijuana companies.
But the bill faces an uphill battle in the Senate where Democrats hold a thin majority, despite having support from Majority Leader Chuck Schumer.
Bill co-sponsor U.S. Sen. Elizabeth Warren said in a statement a lack of access to bank accounts, credit cards and checks for legal cannabis companies has “forced state-legal cannabis businesses to operate in cash, opening the door to tax evasion and to a dangerous pattern of robberies.”
She also pointed to equity concerns.
Medical marijuana is now legal in 36 states, with another 17 allowing adult use.
Seun Adedeji, who operates three retail pot shops in Western Massachusetts, said he “had to get scrappy” to scrape together his savings and max out credit cards to get enough cash to open his first dispensary about five years ago in Eugene, Ore.
“I didn’t have any bank loan because cannabis is still federally illegal and there was not a bank willing to give us a loan,” Adedeji said. He now owns four Elevate Cannabis locations.
Torrisi called the lack of access to loans and banking services “the biggest barrier to entry” in an industry where startup costs can add up to well over $1 million.
A handful of banks in Massachusetts are willing to work with cannabis businesses, but Adedeji said with the vast majority of banks turning cannabis entrepreneurs away, Black men like himself can have a hard time breaking into the industry.
“Banks are more of an equalizer and give us a fair footing,” Adedeji said. “It gives us more options and gives us the potential to at least have a shot at getting the capital.”
A recent Pew Center report found Black-owned pot shops are still rare despite diversity efforts in many states where cannabis is legal.
Only about 4% of cannabis businesses nationwide are Black-owned, according to a Marijuana Business Daily study.
Opening up access to financial services would “go a long way” to remedying that, Torrisi said.