Patronis Seeks Banking Changes for Medical Marijuana Companies
Medical marijuana has become a multibillion-dollar industry throughout the nation, but banks are shunning cannabis companies because pot remains illegal under federal law.
February 08, 2019 at 01:06 PM
5 minute read
Citing a “tremendous safety threat,” Florida Chief Financial Officer Jimmy Patronis is asking President Donald Trump to use his executive power to allow banks to do business with state-authorized medical marijuana companies.
Medical marijuana has become a multibillion-dollar industry throughout the nation, but banks are shunning cannabis companies because pot remains illegal under federal law.
In a letter to Trump, Patronis outlined the dangers facing dispensaries mainly operating as “cash-only businesses,” as banks and credit unions won't take their deposits due to “the lack of federal clarity on cannabis banking.”
“This leads to medical marijuana dispensaries handling this problem in an antiquated and dangerous manner by transporting millions of dollars in duffle bags of cash and even driving the cash endlessly around in trucks,” the Panama City Republican wrote.
Since voters broadly legalized medical marijuana in Florida in 2016, the industry has grown to an estimated $300 million, and sales are expected to jump to $1 billion by 2020. More than 220,000 patients have registered for medical marijuana treatment, Patronis told the president.
“The size and staggering growth of the medical marijuana industry, paired with limited regulated banking options, puts patients and employees in dangerous situations as potential targets for criminal activity,” he wrote.
Patronis noted that William Barr, the president's selection for U.S. attorney general, has called the federal legislative process the “right way to resolve” legalizing medical marijuana.
But getting Congress to approve legislation is a lengthy process, Patronis said.
“In the meantime, these businesses are easy targets for criminals and criminal activity,” Patronis wrote in the two-page letter to Trump dated Thursday.
Patronis asked Trump “to consider administrative action in the interim to offer clear guidance to the financial services community on how they can follow our existing state laws without risk of penalty from federal regulators.”
“We must reassure financial institutions that there will NOT be retribution for servicing businesses that act within the state's legal framework,” the chief financial officer wrote.
The cash-only marijuana industry “poses a serious threat to the security of our communities,” Patronis added. He asked the federal government “to step in to help now, before an incident happens and we are instead in the sad position of responding after the fact.”
Former U.S. Attorney General Jeff Sessions last year rescinded a policy, known as the Cole memorandum that had been issued by the Justice Department under President Barack Obama. The policy had said federal officials would not prosecute people who were complying with state marijuana laws.
Sessions' reversal caused banks and credit unions, which were already leery of doing business with pot companies but had relied on the Cole memo to open their doors to cannabis operators, to back away from offering financial services not only to marijuana companies but also to ancillary businesses, such as couriers.
Florida Agriculture Commissioner Nikki Fried, a former medical marijuana lobbyist who serves on the state Cabinet with Patronis, was directly impacted by the banking conundrum last summer.
Wells Fargo shut down Fried's campaign account because she took contributions from lobbyists representing the medical marijuana industry.
“Banking is a ubiquitous problem in the industry,” Christian Bax, a former director of the state Office of Medical Marijuana Use, told The News Service of Florida on Thursday.
The problems transcend point-of-sale transactions at dispensaries, said Bax, a lawyer. Medical marijuana operators also face issues when trying to deal with large expenses, such as payroll, or emergencies, such as roof repairs.
“The cannabis industry in general has had to be very creative in how they structure their businesses. The traditional ways of going into a bank and asking for a small-business loan are not really open to cannabis companies,” Bax said.
While operators have been able to establish relationships with some credit unions or local banks, the former pot regulator said, “the problem is they're all FDIC insured and they're all federally regulated.”
Trump could ease the situation by having the Department of Justice issue another memorandum or through other executive action.
“If he said there will be no prosecutions for banks who bank in the cannabis industry, that would be tremendously impactful,” Bax said. “It may not result in Wells Fargo or Bank of America enthusiastically banking cannabis companies, but it may result in smaller or midsize charter banks to be able to bank the industry without the fear of losing their charter or perhaps even criminal prosecution.”
Patronis, who last year wrote a letter to the chairman of the Federal Reserve seeking clarification on the marijuana banking issue but never received a response, told the News Service that cash-only businesses are “vulnerable to money-laundering” and threats.
“At some point, if we don't hear of any solution, there will be a robbery,” Patronis predicted. “I don't care how you feel about medical marijuana or access to it, but it's here and it's existing. … This is unacceptable.”
Questions about the marijuana money trail don't stop at the dispensary cash register.
Are workers employed by medical marijuana operators restricted from using banks to deposit their wages? Patronis asked.
“We need clarity and the federal government really needs to get us some guidance,” he said.
Dara Kam reports for the News Service of Florida.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllTrump Mulls Big Changes to Banking Regulation, Unsettling the Industry
CFPB Orders Big Banks to Limit Overdraft Fees to $5. But Will Its Edict Stick?
3 minute readUS Judge Throws Out Sale of Infowars to The Onion. But That's Not the End of the Road for Sandy Hook Families
4 minute readGreenberg Traurig Initiates String of Suits Following JPMorgan Chase's 'Infinite Money Glitch'
Trending Stories
- 1Decision of the Day: Judge Reduces $287M Jury Verdict Against Harley-Davidson in Wrongful Death Suit
- 2Kirkland to Covington: 2024's International Chart Toppers and Award Winners
- 3Decision of the Day: Judge Denies Summary Judgment Motions in Suit by Runner Injured in Brooklyn Bridge Park
- 4KISS, Profit Motive and Foreign Currency Contracts
- 512 Days of … Web Analytics
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250