Local cannabis dispensary owners and managers hope a hearing at the U.S. House Financial Services Committee will mean better access to banking options.
The committee held the first hearing for the Secure and Fair Enforcement Banking Act of 2019 in Washington D.C. on Feb. 13. The act, which would allow financial institutions in states where marijuana is legal to work with employees in the industry, was initially proposed by U.S. Sen Jeff Merkley, D-Oregon and proposed again earlier this year.
Local dispensary managers said if banks were willing to do business with them, it would make their jobs much easier.
At La Mota, a dispensary chain with a location in downtown Roseburg, General Manager Veronica Leon has to pay her employees in cash, which she said is a benefit for employees but a disadvantage for the business.
“I know it’s a goal to get us into some sort of banking,” Leon said. “We have to pay bills with money orders. We have to bounce from place to place because some places have limits.”
When she does have to take large amounts of cash or money orders, she sometimes will have her boyfriend come with her as an added level of security.
Oregon voters approved the legalization of medical marijuana in 1998 and recreational marijuana in 2014, making it one of 10 states where both are legal. As for the federal government, it still considers marijuana a “Schedule 1” drug, on par with heroin.
Because marijuana remains illegal under federal law, opening a business account in a federally insured bank is considered money laundering. So businesses must work either exclusively with cash or use one of the few credit unions willing to accept marijuana money. OLCC spokesman Mark Pettinger said he only knows of three institutions with a memorandum of understanding with the Oregon Liquor Control Commission allowing them to serve cannabis businesses.
Rachel Pross is the Chief Risk Officer at Salem-based Maps Credit Union, one of only three and the closest one to Douglas County. She said Maps serves cannabis businesses in part to enhance community safety. Due to legal constraints in banking, most cannabis businesses in Oregon work solely in cash, making them bigger targets.
“A 2015 study found that, in the absence of being banked, one in every two cannabis dispensaries were robbed or burglarized,” Pross said in her testimony. “Compare that to Maps — in the past two years, we have received over 500 million dollars in cash deposits from cannabis businesses. That’s 500 million dollars removed from Oregon’s sidewalks that used to be carried around in backpacks and shoeboxes by legitimate, legal business owners.”
420 Club dispensary in Roseburg is at the end of its 90-day waiting period to get a business account with Maps, according to the dispensary’s general manager, Jennifer Morse. She said it was “a process” to get the account and she hopes the SAFE Banking act will make it easier.
“(The government) wants 100 percent transparency,” Morse said “How do you do that with cash? The fact that (the act) is being heard is progress.”
Maps serves 115 million members, including approximately 500 cannabis business accounts, including farms, producers, processors and dispensaries. Cougar Cannabis on Diamond Lake Boulevard has a business account with Maps, but owner Shellie Grammer said getting it wasn’t easy.
“Maps was my last (resort), and it’s hard to get a bank account there,” Grammer said. “Not just anybody in the business can apply and get a bank account.”
The state has over 600 dispensaries and, according to the OLCC cannabis tracking system, they have brought in more than $50 million every month since March 2018.
“Even financial institutions who choose not to bank the cannabis industry still risks unknowingly serving those businesses in states where cannabis is legal,” Pross said. “Indirect connections are often difficult to identify and avoid, because growers and retailers don’t operate in a vacuum. Like any other industry, they work hand-in-hand with vendors and suppliers.”
Indirect connections could be anything from a printing company that makes business cards to the landlord renting the office space and the utility company providing water or power. She said the SAFE Banking Act would protect those interacting companies who currently could unknowingly risk violating federal law.
Pross said by not having explicit legal clearance for financial institutions to work with the cannabis industry, the federal government risks having those business operate in the “underground economy,” leading to a loss of tax revenue and increased crime.
“We strongly believe that financial institutions should be permitted to lawfully serve businesses that engage in activities that are authorized under their state laws, even when such activity may be inconsistent with federal law,” Pross said. “We need Congress to provide financial institutions who choose to serve state-sanctioned cannabis businesses with a safe harbor.”