Credit Unions Saving BC Cannabis Retailers
Credit unions, not banks, are what’s saving BC cannabis retailers by providing basic banking services. Three years into legalization, and Canada’s major banks are still nervous about doing business with the cannabis industry. Experts say that comes down to two reasons: US pressure and cannabis stigma.
BC Cannabis Retailers “Struggling” Three Years After Legalization – LPC
“We’re not even talking about loans or credit cards,” said Jaclynn Pehota, executive director of the Association of Canadian Cannabis Retailers (ACCRES). “We’re talking about very basic financial services like a chequing account. My members are still struggling, three years post-cannabis legalization in Canada.”
Pehota said that 50 of the 52 BC cannabis retailers and ACCRES members have been denied banking services from banks. Two managed to get services due to long-standing relationships.
“Even those folks were shocked by the treatment they received when they went into those institutions,” Pehota said. “Having a conversation about a company that has the same director, same makeup, it’s a legal product, same regulatory framework — and when they come in with a cannabis business the bank goes, ‘Whoa, whoa, whoa.'”
“The banks are afraid of the extraterritorial reach of U.S. laws and this makes it more difficult for them,” said Mike Schilling, president and CEO of Community Savings. His credit union represents more than 50 cannabis retailers in BC. “There are a lot of checks and balances we need to do. And I think the banks have made an economic decision that there is no big profit in this.”
Problem Not Only for BC Cannabis Retailers – LPC
The CBC report states it reached out to the major banks in Canada. (Please see link to full story below.) The CIBC mentioned that it supports emerging Canadian industries, but that for the cannabis sector, that’s on a case-by-case basis. RBC said the same.
“With an evolving legal landscape for cannabis globally, RBC continues to evaluate business relationships on a case-by-case basis, taking into consideration a number of factors to ensure compliance with laws and our internal risk parameters.”
And it’s not just BC cannabis retailers that are having problems. The RBC statement is almost word for word the statement it made two years ago when Portugal Cove-St. Phillip’s, Nfld retailer lost his banking services. He revealed that US pressure led to cannabis banking services denials.
“Most of them are saying that we are not taking cannabis clients right now due to us having dealings with America and America putting pressure on us to not have cannabis industries in our bank,” Clarke told CBC’s St. John’s Morning Show.
In the same article, Lisa Campbell, CEO of Lifford Cannabis Solutions, said that TD actually cancelled all her banking accounts.
“Due to banking regulations in the States they would be unable to approve it,” Campbell said at the time. “I still can’t trust a bank I’ve been with since I was four years old. I can’t trade with them.”
Changes Slow in the US – LPC
Change might be coming in the US, but it’s slow. Ironically, cannabis retailers in the US could have better access to banking services, where it’s illegal, than Canadian and BC cannabis retailers do if the SAFE Banking Act passes there. And, it’s looking more and more likely that cannabis will be decriminalized in the US before it becomes legal. Again, that will only apply to US companies. Chances are, in the Canadian banking industry, the same pressures and stigma will come to play.
Until then, credit unions may be the best bet for BC cannabis retailers – and cannabis retailers across Canada – who need banking services.
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