The first stores licensed to sell recreational marijuana in Massachusetts should be open in a few weeks. But anyone hoping to plunk down $60 for an eighth of an ounce of weed might have to leave the plastic at home and bring some twenties instead.
With the July debut of the legal pot industry fast approaching, not a single financial institution in the state has stepped forward to say it will provide banking services to companies that grow, process, or sell marijuana products for recreational use.
That could mean cannabis companies will be forced to deal solely in cash. That would be a major headache for operators who would have to meet payroll and pay taxes with stacks of bills. It also raises security concerns, potentially adding to the nervousness of local officials already skeptical of allowing pot shops in their communities.
“It’s a major concern,” said David Torrisi, executive director of the Commonwealth Dispensary Association, which runs medical marijuana dispensaries and expects to soon receive state licenses to sell recreational pot. “We could open without banking, but we’d really rather not.”
Massachusetts Cannabis Control Commission chairman Steve Hoffman has met repeatedly with local banks and credit unions to encourage them to do business with companies licensed by his agency. So far none has jumped at the chance.
“People were there — they were listening, they were asking questions, they took my business card,” Hoffman said about his meetings with financial executives. “A lot of people who run banks and credit unions are thinking about it. . . . I don’t think it’s a crisis as much as something I’d like to fix.”
Banks and credit unions are wary of the cannabis industry mostly because marijuana is still illegal under federal law. Credit card networks also do not accept recreational marijuana transactions for the same reason.
Jon Skarin, senior vice president of the Massachusetts Bankers Association, said some banks are intrigued by the opportunity — but, with business booming amid a strong economy, not intrigued enough to take the chance yet.
“There is a reticence to be the first one to jump in the pool,” Skarin said. “Our members tend to be fairly risk averse, and I think a lot of them want to sit back and see how everything plays out.”
It’s slightly easier for banks to work with medical marijuana businesses, thanks to a federal budget rider that prevents the Justice Department from spending resources prosecuting medical operators who follow state law.
Even so, Medford-based Century Bank is currently the only institution working with medical dispensaries in Massachusetts. And several of the bank’s medical marijuana customers have said it’s not clear whether Century will continue taking their deposits if they get recreational licenses, too.
Century Bank did not respond to requests for comment.
Several medical marijuana operators said they were hopeful at least one bank would emerge to take on the recreational business, and said their dispensaries already have strong security measures in place. But they were also reluctant to discuss their cash-handling in detail, in order to not compromise their security measure. They also don’t want local officials who must approve their recreational operations to see the facilities as unacceptable security risks.
“We are preparing for an increase in our cash business, with plans for increased capacity for vault storage and security,” said Keith Cooper, the chief executive of Revolutionary Clinics, which operates a dispensary in Somerville.
Robberies have been a problem in other legal-marijuana states where operators can’t access banking, including in Washington. There, one owner said recently his stores had been robbed a total of 10 times, to the tune of about a quarter-million dollars; in one incident thieves drove a car through the door of his shop.
In Colorado, where commercial pot sales began in 2014, many marijuana companies spent years dealing exclusively in cash before financial institutions became comfortable servicing them. While a majority of operators now have bank accounts, the early days of the Colorado industry saw companies stashing sacks of bills in different vaults around town, and showing up at state offices with tens of thousands of dollars of cash in duffel bags to pay taxes.
There is some hope. President Trump earlier in June said he would support new legislation filed by Senators Elizabeth Warren of Massachusetts and Cory Gardner of Colorado that would exempt all marijuana activity that is legal under state law from the federal Controlled Substances Act, and explicitly allow banks to do business with marijuana firms.
Paul Gentile, president of the regional Cooperative Credit Union Association, said the recent political developments have some of his members in Massachusetts “very serious about moving forward.”
“The issue is the lack of any certainty on the federal regulatory side,” Gentile said, predicting several credit unions eventually will offer banking services sometime next year. “It’s just so odd for something to be legal in the state and yet you can’t bank it.”
But for now, financial companies remain skittish because of conflicting messages coming out of Washington.
On the one hand, Trump’s Treasury Secretary, Steve Mnuchin, has said marijuana banking should be permitted, telling Congress in February, “I assure you that we don’t want bags of cash.”
But Attorney General Jeff Sessions earlier this year rescinded a Justice Department policy that had shielded marijuana operators from federal prosecution as long they followed state law and met other basic requirements.
“The DOJ needs to get out of the way,” said Andrea Cabral, once the top public safety official in Massachusetts and now chief executive of a marijuana company planning to open a shop in Boston. “The burden shouldn’t be on states to prove why they ought to be allowed to take in tax revenue from these businesses . . . as they do from any other business.”Dan Adams can be reached at firstname.lastname@example.org. Follow him on Twitter @Dan_Adams86.