Legal weed businesses previously forced to operate in all cash due to conflicting federal pot policies are now protecting their profits and securing financing with the help of a single Maryland bank.
Severn Savings Bank, a community bank based out Annapolis, is helping solve one of the major roadblocks to financial legitimacy that is plaguing legal weed operations throughout the country. Federal law, which criminalizes marijuana as a Schedule I substance on par with heroin, is at odds with a growing number of state laws legalizing pot for medical and recreational purposes, leaving a legal gray area that keeps a majority of U.S. banks from becoming financially involved with the cannabis industry, reports The Washington Post.
Most banks simply do not want to risk running afoul of federal law by engaging with a marijuana operation. Severn Savings is bucking the trend, however, welcoming the states burgeoning medical marijuana industry with open arms.
At least two dispensaries and two growers in the state confirmed to The Washington Post they hold accounts with Severn, but industry insiders say there are a lot more Maryland pot business that have a relationship with the bank.
“That bank was very quick out of the gate saying, ‘I want to work with the industry,'” Jake Van Wingerden, who runs SunMed Growers, which has an account with Severn, told The Washington Post. “Everybody I talk to has accounts at Severn…I don’t know how else we would do business.”
Medical marijuana businesses operating with the help of Severn say while they must pay a large fee and go to great lengths to prove the legitimacy of their business to the bank, the relationship allows them to buy marijuana through wire transfers, make business purchases with a debit card and pay employees through automatic deposits. It also gives the businesses greater financial credibility.
Unlike legal marijuana operations in other states, these businesses no longer have to protect their cash on-site, something pot businesses throughout the country say draws criminal interest.
“We want that recognition that cannabis is not a back-alley business,” Terri White, a psychotherapist who owns a dispensary with a Severn account that is awaiting final approval from state regulators, told The Washington Post. “We’re here to help people and make a financial impact on the community.”
Recreational cannabis is legal in nine states while medical cannabis is legal in 29 states and Washington, D.C. In states with recreational legalization such as Colorado, Oregon and recently California, roughly 70 percent of the pot businesses are estimated to deal in all cash.
Industry experts do not expect the landscape to change under Attorney General Jeff Sessions, who is vehemently against full legalization of weed. As long as marijuana remains a federally prohibited substance, most banks will likely continue to steer clear of legal cannabis ventures.
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