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* This is definitely an issue…
Supporters of legalized marijuana in Illinois have launched efforts aimed at making it easier for legitimate businesses that sell the product to have bank accounts and accept credit card transactions.
State Treasurer Michael Frerichs, a Democrat, said Monday he supports legislation in the General Assembly that would prohibit state banking regulators for punishing banks or credit unions that provide basic banking services to legitimate cannabis-related businesses. […]
“Prior to last year, about 85 percent of our cannabis industry was banked with a single bank in the state of Illinois,” Rep. Kelly Cassidy, a Chicago Democrat, said during the news conference. “As the Trump administration ramped up threats towards the legal cannabis industry, that bank got nervous about potential backlash and informed all of these businesses that they would cease to have a banking relationship with them”
Frerichs said the result of that has been to move the finances of the legal cannabis industry into a kind of underground cash-based economy.
* Also…
Separately, Frerichs also seeks to create a program to deposit state funds into banks that could be used for loans for marijuana businesses. It would be similar to a program that has provided more than $1 billion in reduced-interest loans to Illinois farmers since 1983.
“This is not a question of if, but when,” he said. “We have medical cannabis in Illinois. I think that recreational is most likely coming.”
* But Americans being Americans, I think the problem will be solved. One Illinois has a story about one alternative…
CannaCard basically creates what Gavin called a “closed loop” in the financial world. The money goes in, and it comes out. He said it’s based on Starbucks’s successful loyalty program, which uses both hard cards that can have their value replenished or a smartphone app that can be restocked online.
“We looked at that and we tried to figure out what would be the easiest for the consumer to relate to, and they’re already using that,” he said. “We kind of took that and ran with it. So I guess you can say we kind of replaced coffee with cannabis.”
Sounds easy, but it’s not. Their system places the same initial demands on customers and dispensaries that banks do, in order to ensure financial transparency. “We are doing basically what the bank has to do to open an account,” Gavin said. “We don’t want any problems, you know, we don’t it to be used as another alternative for money laundering. That’s exactly what we’re trying to get around. We want to be able to offer these businesses full transparency, no different than any other business that’s out there.”
Interesting.
* Related…
* If recreational cannabis becomes legal in Illinois, how the industry could grow: Colorado had issued 38,000 licenses for industry employees as of March 2018, according to the report, with roughly half of license-holders actively working in the field. The industry employs roughly 17,821 full-time-equivalent positions — an encouraging statistic to those who would like to see more cannabis jobs created here.
* Cannabis field ‘uncharted territory’ for lawyers if legalization occurs: But before lawyers can help would-be entrepreneurs interpret adult-use cannabis laws, the state legislature would need to consider and approve a new bill for legalization.
* How one accountant persuaded his firm to get into the cannabis business
posted by Rich Miller
Monday, Mar 18, 19 @ 2:24 pm
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Perhaps look at best practices where it’s already happening?
Comment by wordslinger Monday, Mar 18, 19 @ 2:29 pm
We would open a new BOS (Bank of Stoners) in one of SPI pletiful empty store fronts —- perhaps the entire Mall —- and start taking in the moolah
Comment by Annonin' Monday, Mar 18, 19 @ 2:31 pm
yep. this is a key issue for running the business. important that they mention not only banks but credit unions to cover things.
Comment by Amalia Monday, Mar 18, 19 @ 2:34 pm
Until the Federal Government and its banking agencies change the laws/rules, Frerichs can try all he wants. Just about every bank in Illinois is insured by the FDIC, it’s a state requirement. Since the Cole Memo is all but trash these days (maybe) accepting a deposit from a marijuana business is problematic, ie illegal. Good grief, even depositing marijuana monies into a bank account would likely require that a SAR be filed - the FBI would love this.
Comment by GetOverIt Monday, Mar 18, 19 @ 2:43 pm
There has also been issues with credit card processors dropping companies that sell CBD. A lot of the companies don’t realize it until after the fact, add 1 or 2 CBD products to their inventory and then the cc processor find out and immediately terminate their services.
Comment by twowaystreet Monday, Mar 18, 19 @ 2:46 pm
–Good grief, even depositing marijuana monies into a bank account would likely require that a SAR be filed - the FBI would love this.–
Is that what’s happening in the states that have legalized recreational weed? The FBI is just crawling all over bank accounts?
Must be easy in legal weed DC — FBI HQ is right on Pennsylvania Avenue.
Curious that Big Money poured $10 billion into legal weed last year, what with the impossibility of protecting their investment.
You’re just a different twist on Reefer Madness.
Comment by wordslinger Monday, Mar 18, 19 @ 3:00 pm
Maybe the State should open their own state chartered bank … the Green Bank of Illinois./s
Seriously, this financial services access issue is a problem that really needs to be solved at the national level.
I believe there is a current case filed by the NRA in New York State over access to financial services / insurance.
https://tinyurl.com/y4yycmzn
Comment by RNUG Monday, Mar 18, 19 @ 3:00 pm
I support legal cannabis use, but even I have a problem with this, “state funds into banks that could be used for loans for marijuana businesses.”
Comment by Just Me 2 Monday, Mar 18, 19 @ 3:10 pm
@Wordslinger: Banks are not generally accepting the deposits. There are quite a few articles out there that place the number of banks accepting the deposit at approximately 500 out of 5000 total banks, and I know of only one credit union in Colorado that accepts deposits.
By the way, getting arrested of losing FDIC insurance and being closed down is a real deterrent. Banks are simply not ready to engage this business without a change in federal law. Also, if a bank is not well rated the entry of this type of risk would be problematic, but what do I know.
Comment by GetOverIt Monday, Mar 18, 19 @ 3:15 pm
- You’re just a different twist on Reefer Madness.-
Just stating the facts.
Comment by GetOverIt Monday, Mar 18, 19 @ 3:17 pm
Wordslinger: Banks are not generally accepting the deposits. There are quite a few articles out there that place the number of banks accepting the deposit at approximately 500 out of 5000 total banks, and I know of only one credit union in Colorado that accepts deposits.
Comment by GetOverIt Monday, Mar 18, 19 @ 3:18 pm
“BOS (Bank of Stoners)”
Beautiful name, man. I love it.
There’s national legalization legislation now, but it hasn’t been voted on. It’s time for politicians to catch up with voters and legalize nationally, so we can bank freely and not do cash-only.
Comment by Grandson of Man Monday, Mar 18, 19 @ 3:36 pm
Store it inside bank safety Deposit boxes then partner with currency exchanges. Basically trade payroll checks for cash, then the MJ sellers deposit the endorsed payroll checks into regular bank accounts. Probably cost a couple of points, but it might be worth it.
Not sure this is legal, but it’s where my imagination led me.
Comment by 47th Ward Monday, Mar 18, 19 @ 3:46 pm
“state funds into banks that could be used for loans for marijuana businesses.”
State of Illinois issues licenses …to businesses that both grow and sell marijuana to themselves at below wholesale?…and who set the retail price (same people)…violates Federal Anti-Trust law(s)?…which prohibit a State sponsored monopoly.
Comment by Anonymous Monday, Mar 18, 19 @ 4:04 pm
Send it western union to yourself
Comment by Rabid Monday, Mar 18, 19 @ 4:58 pm
== violates Federal Anti-Trust law(s)?…which prohibit a State sponsored monopoly. ==
Avoud that by marketing financial services to the firearms industry also; they are being squeezed by some states.
Comment by RNUG Monday, Mar 18, 19 @ 5:04 pm
The GA should petition the federal government to make the control of recreational drugs a state issue. Use alcohol and the 21 Amendment as a model.
Comment by Last Bull Moose Monday, Mar 18, 19 @ 5:16 pm
–You’re just a different twist on Reefer Madness.-
Just stating the facts.–
The facts are businesses are selling weed in 10 states and DC right now and private capital invested $10 billion in 2018.
Comment by wordslinger Monday, Mar 18, 19 @ 5:56 pm
Too bad the industry didn’t accept the draft state legislative recommendations a few years ago. {Sigh}
Comment by {Sigh} Monday, Mar 18, 19 @ 9:52 pm
==State Treasurer Michael Frerichs, a Democrat, said Monday he supports legislation in the General Assembly that would prohibit state banking regulators for punishing banks or credit unions that provide basic banking services to legitimate cannabis-related businesses== State banking regulators do not punish banks for providing banking services to legitimate cannabis-related businesses. Many of the banks are afraid to violate state and federal criminal statutes and put their businesses at risk. Until the criminal statutes are fixed, it will remain difficult to bank those customers.
Comment by SAP Tuesday, Mar 19, 19 @ 3:21 pm