Worries over a potential crack down on the marijuana industry caused the nonprofit cannabis advocacy organization to lose its decades-long relationship with PNC Bank.
After 22 years of providing banking service, PNC Bank closed Marijuana Policy Project’s accounts over growing concerns the Trump administration will interfere with state-licensed medical and recreational marijuana programs. The bank recently notified the nation’s leading marijuana advocacy group that their accounts would be closed due to their association with the cannabis industry.
“They told me it is too risky,” MPP’s chief operating officer Nick Field told The Washington Post. “The bank can’t assume the risk.”
Despite 29 states legalizing medical marijuana and eight legalizing adult use marijuana, many banks refuse to service businesses that grow or distribute cannabis because of its federal classification as a Schedule I substance. Fearing prosecution from the U.S. Treasury and Justice departments for transporting and transmitting funds derived from the distribution of marijuana, financial institutions have historically refrained from serving marijuana businesses.
MPP does not grow or distribute cannabis – a distinction that had previously allowed it and other policy and advocacy organizations to obtain financial service. MPP has held accounts with PNC Bank since it launched in 1995. A recent audit on the organization’s account revealed funding from businesses that handle marijuana, prompting action from PNC Bank.
A spokeswoman with PNC told The Washington Post that “as a federally regulated financial institution, PNC complies with all applicable federal laws and regulations.”
The bank’s move to cut ties with the organization suggests that the looming potential of federal interference has caused anxiety in the banking industry.
Earlier this month, it became public that U.S. Attorney General Jeff Sessions wrote a letter to congressional leaders in May imploring that the medical marijuana protections currently in place be eliminated. The Rohrabacher-Farr amendment prevents the Justice Department from using federal funds to interfere with state-sanctioned medical marijuana businesses. Recreational marijuana is loosely protected by the 2013 “Cole memo,” issued during the Obama administration by Deputy Attorney General James M. Cole. The memo instructs law enforcement agencies to not use resources to prosecute the authorized sale of adult use marijuana in states where it has been legalized.
While the Justice Department has never investigated a bank for servicing state-legal marijuana businesses, an executive at the American Bankers Association believes the protections in place don’t offer enough reassurance to banks and financial institutions.
“Because marijuana is illegal under federal law, banks accepting any money associated with its sale could be investigated for money laundering,” said Rob Rowe, the vice president for regulatory compliance at the American Bankers Association.
Without financial service, cannabis-related businesses are forced to function as cash-only operations. They’re unable to accept credit card purchases, provide direct deposit for employees, or submit tax payments electronically. Earlier this year, U.S. Senator Elizabeth Warren and others wrote an open letter to the Financial Crimes Enforcement Network, urging it to not go after banks that service marijuana businesses in states where it’s legal.
During his campaign, Donald Trump had voiced support for medical marijuana, putting him in line with 94 percent of Americans. The nation’s legal marijuana industry is expected to add $24 billion to $44 billion annually to the country’s economy by 2021 and is projected to create more jobs than manufacturing, utilities and government within the next three years. Since taking office, however, officials in the Trump administration have alluded to the possibility of federal interference.
Amid the growing uncertainty that Trump and Sessions could roll back protections and enforce the federal Controlled Substances Act, a group of bipartisan U.S. Senators recently reintroduced legislation that would reclassify cannabis and protect medical marijuana states. A report published earlier this year by cannabis-focused research firm Arcview Market Research projected that the legal cannabis industry would continue on its annual growth rate despite any opposition by the Trump administration
MPP says that it is currently seeking a new bank.
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