No Definitive Answers, but Canadian Banking Services Are Drying Up – LPC
As cannabis banking services become harder to access in Canada, and many believe the US may be behind it. This week, THC Distribution in Portugal Cove-St. Phillip’s, Nfld announced that it will be cash only now. Owner Thomas Clarke said the Royal Bank of Canada (RBC) sent him a letter stating his business was “high risk”. After years of doing business together, it simply cancelled his account. No other banks in the province will offer cannabis banking services, he said.
“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.
It’s a troubling story that is being picked up across the media. Part of the issue is that the banks are not transparent about their policies surrounding cannabis banking services. When the CBC contacted RBC, an email response stated:
“RBC evaluates banking relationships within the sector on a case-by-case basis. Decisions are made against a number of factors, including: the nature of their business, their financial position, creditworthiness, their ability to comply with legal and regulatory requirements, as well as other factors relevant to their specific business.
“This issue has many dimensions, and the law and regulatory framework for the sector continue to evolve. We will continue to take all factors into account within the context of our banking policies.”
RBC seemingly did not deny that American pressure was at least partly a consideration.
Bank Denials Not Unusual – LPC
Clarke’s isn’t the only story. Lisa Campbell, CEO of Lifford Cannabis Solutions, said that the TD bank denied her business application. It also cancelled the account of her non-profit group, the Cannabis Beverage Producers Alliance.
“Any cannabis business is seen as high risk by Waterhouse,” she said. “Due to banking regulations in the States they would be unable to approve it. I still can’t trust a bank I’ve been with since I was four years old. I can’t trade with them.”
Back in February 2019, the Richmond News ran an article telling a similar story. Larger companies such as Canopy Growth seemingly have good relationships with its bank partners. But smaller entrepreneurs looking for cannabis banking services do not. Tantalus Labs CEO Dan Sutton does now, but he remembers when his previous bank cut off his account.
“I almost missed payments to contractors because of the scramble to get new accounts and move the assets over,” he said.
“The fact that American institutions are putting direct pressure on our banks is an injustice.”
Regardless, it seems that cannabis banking services will remain an issue for many smaller cannabis companies.
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