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Banks shy away from medical marijuana businesses

Medical marijuana is bottled for patients at a California dispensary.

Frederic J. Brown/AFP/File 2014

Medical marijuana is bottled for patients at a California dispensary.

As nine dispensaries prepare to open in Boston’s suburbs to dispense medical marijuana in 2015, several have yet to find a bank that will take their money because the drug is still illegal on the federal level.

“As a federally regulated financial institution, we abide by federal law and do not bank marijuana-related businesses,” said Mark Pipitone, a spokesman for Bank of America.

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While 63 percent of Massachusetts voters approved the legalization of medical marijuana nearly two years ago, dispensaries are scurrying to find a bank to accept deposits, which would allow them to avoid having to accept cash for their products and allow them to pay bills with checking accounts.

Meanwhile, dispensaries north of Boston in Haverhill, Lowell, and Salem; south of Boston in Brockton and Quincy; and west of Boston in Ayer, Brookline, Milford, and Newton are preparing to open their doors. All plan to begin distribution sometime in 2015. Dennis and Northampton are the other two locations where dispensaries received initial state approval.

The prospect of an all-cash business touches the nerves of the new medical marijuana entrepreneurs.

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“The big problem in this industry is the bank,” said Chris Edwards, executive director of Alternative Therapies Group of Salem, which plans to open by next spring. “It’s a public safety concern to say the least. This is an all-cash business and it would certainly be beneficial for dispensaries, patients, and the host communities if banks could participate in this industry.”

Kevin Fisher, the executive director of New England Treatment Access in Brookline — which plans to open in January — found a bank that will take the dispensary’s money but declined to name it.

“I don’t want managers walking around with piles of cash,” he said. “I don’t want criminal elements in the area knowing about it; it’s really time we see some change.”

Patients will be carrying cash, too. In Quincy, Ermont is gearing up to open its 36,000-square-foot facility by mid-2015. Like most other dispensaries, Ermont plans to offer several strains of marijuana along with edible and infused products.

“The cost will be approximately $300 an ounce,” said Ermont spokeswoman Donna Rheaume.

The building, the site of a former roofing business and a granite company, will house Ermont’s cultivation center as well as its retail operation. Rheaume said the company plans to run a shuttle from the Quincy Center MBTA station for patients.

To ease the roadblock to checking accounts, US Attorney General Eric Holder in January said marijuana dispensaries should have access to the banking system. But some banks want clarification from federal and local authorities.

“Banks are taking a very cautious approach to this customer segment because of the potential repercussions from regulators, the federal government, and especially the Department of Justice,” said Paul Evangelista, a vice president at Century Bank. Evangelista said Century Bank has met with representatives from dispensaries, but has not decided if it will accept their business.

Attorney General Martha Coakley, who is also a candidate for governor, declined through a spokeswoman to answer questions about the subject of all-cash dispensaries.

The Globe reported in January that the state’s banks and credit unions had asked US Senator Elizabeth Warren, a Massachusetts Democrat who is a member of the Senate Banking Committee, to assist in reconciling state and federal marijuana laws.

“Senator Warren’s office has been working to get federal guidance for Massachusetts financial institutions,” Lacey Rose, Warren’s spokeswoman, said in an e-mail.

While several area police chiefs have expressed concern about the security of doing business, the dispensaries are now obtaining final permits from municipalities and also are working with the state Department of Public Health on the last phase before they receive final certificates of registration. In the coming months, the state plans to review each dispensary plan for retail sales, security, and cultivation.

The Department of Public Health’s final review comes after it stumbled in its initial vetting of applicants. In January, the department approved 20 dispensaries, but took another look after questions arose about corporate structures, hidden profits, and personnel. In June, the department eliminated nine of those applicants, including three dispensaries that had been proposed by former Massachusetts congressman William Delahunt. Those were applying to open in Plymouth, Mashpee, and Taunton.

With the extended review, most dispensaries are now expected to open in the winter of 2015, at least six months behind schedule.

Matthew Allen, executive director of the Massachusetts Patient Advocacy Alliance — which in 2012 lobbied to legalize medical marijuana — said the state let down patients who expected to be buying by now.

“At this point, many patients are going without medicine, and others are risking their personal safety and health by attempting to obtain medical marijuana from the black market,” he said. “Many more still face prosecution by police, even though they are following the law.”

Under state law, a patient “who suffers from a debilitating medical condition” can receive approval from a medical doctor to receive medical marijuana. Patients will be eligible to purchase up to 10 ounces every 60 days.

New England Treatment Access, which will open its retail dispensary on Washington Street in Brookline, plans to start growing marijuana at its cultivation facility in Franklin next month. Under state regulations, the first harvest must come from seeds.

Kevin Fisher, executive director of New England Treatment Access, said the state is not providing the seeds and declined to say where the seeds for his initial crop will come from. He said the crop would take up to four months to grow and cure. Still, he expects to offer at least 24 different strains to patients, along with marijuana-infused edible products when the Brookline dispensary opens.

Fisher, who also co-owns a recreational marijuana store in Steamboat Springs, Colo., said he would prefer to grow a crop using existing clones from plants, since the strains have already been established.

“That’s where the disappointment is — some genetics I have are decades old,” he said.

Steven A. Rosenberg can be reached at srosenberg@globe.
com
. Follow him on Twitter @WriteRosenberg.
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