The cannabis industry is all too familiar with banking headaches, as most federally regulated financial institutions refuse to work with cannabis businesses due to... Massachusetts Refuses to Referee Marijuana Testing Dispute

The cannabis industry is all too familiar with banking headaches, as most federally regulated financial institutions refuse to work with cannabis businesses due to marijuana’s classification as a Schedule I substance.

However, these banking issues extended even further earlier this month, when Wells Fargo severed ties with Nikki Fried, a Democrat running for agriculture commissioner in Florida, citing donations she received from the cannabis industry.

Wells Fargo ended its banking relationship with Fried Aug. 3 due to “a ‘political platform’ that included advocacy for ‘patient access to medical marijuana,’” according to a press release on Fried’s campaign website.

Image: © Laimerpramer | Wikimedia Commons

“Wells Fargo’s action here is absolutely inexcusable,” said Jeffrey Zucker, co-founder and president of Green Lion Partners, a cannabis-focused business strategy firm. “While it highlights the extreme confusion around banking in cannabis, this issue should never come into play for political candidates fighting for the needs of constituents. Situations like this will hopefully push the federal government to give much-needed banking clarity, and in the meantime, another bank will ideally step up to support Candidate Fried.”

Fried filed to run for Florida commissioner of agriculture and consumer services at the beginning of June and opened a campaign account with Wells Fargo on June 13, according to the campaign’s press release. A bank representative then reached out to the campaign July 11 via email, saying that Wells Fargo had “uncovered some information regarding the customers {sic} political platform and that they are advocating for expanded patient access to medical marijuana,” the release said. The email then asked if the campaign would receive “funds received from lobbyists from the medical marijuana industry in any capacity.” The campaign answered the questions in a July 17 response, the release stated, and on Aug. 3, a Wells Fargo representative called the campaign’s compliance manager and said the bank was ending its relationship with Fried because of her relationship with the medical marijuana industry.

Fried held a press conference Aug. 20 at the Florida Capitol to address the bank’s closure of her account.

“On Aug. 3, I was notified by Wells Fargo that they were terminating [the] banking relationship with my campaign because of my advocacy of expanding medical marijuana to the patients of Florida and because my campaign accepted contributions from medical marijuana lobbyists,” Fried said at the press conference. “When Wells Fargo first sent an email a few weeks ago, making this outrageous decision, they told me my account was being flagged because of my ‘political platform’ and [asked] if I was going to be taking contributions from lobbyists within the industry.”

Medical marijuana is the first item listed under Fried’s priorities on her campaign website. Despite the majority of Florida voters approving the use of medical cannabis, she wrote, Gov. Rick Scott and the Republican-led legislature have delayed implementation of the state’s medical marijuana program, limiting patients’ access to their medication.

“As your next Commissioner of Agriculture and Consumer Services, I will be a fierce advocate for patient access to medical marijuana,” Fried wrote on the site. “It will be one of the top priorities of my administration to end the obstruction and ensure the people of Florida have access to the medicine prescribed by their doctors.”

Prior to entering the race for agriculture commissioner, Fried ran Igniting Florida, a medical marijuana lobbying firm.

Fried indicated in the Aug. 20 press conference that her advocacy of medical marijuana and patient access is a tentpole policy platform for her campaign. “Wells Fargo’s actions against my campaign are emblematic of what is wrong with our government and politics today,” she said.

Industry stakeholders now wonder if this will be the first in a string of account closures for politicians who have accepted donations from the cannabis industry.

“What’s next, will Cory Booker’s accounts be closed?” said Arnaud Dumas de Rauly, co-CEO of The Blinc Group, a cannabis business incubator. “Should we expect to see candidate Cynthia Nixon’s accounts close as well? Following this path would lead to more than 50 percent of our officials’ banking demise. This is definitely a step in the wrong direction and will certainly have political and electoral consequences.”

But while this may be the first time a political candidate’s bank account has been closed due to ties with the cannabis industry, it is a common occurrence for cannabis businesses.

“This is much bigger than my campaign,” Fried said at the press conference. “I am happy to tell Wells Fargo good riddance, and finding a bank to take my campaign contributions without making a value judgement on my platform was not difficult to find. But when this happens to marijuana businesses—as it does every day, all over the country—it is a much more devastating impact.”

“It really just underscores the problem that we’re seeing with financial institutions not having their concerns addressed about doing business with the legal cannabis industry,” Mason Tvert, spokesperson for the Marijuana Policy Project (MPP), told Cannabis Business Times. “Many banks are looking for a guarantee that there’s absolutely no way they could face any theoretical legal problems, and that can only be provided by Congress.”

And the problem continues to grow as more states legalize and regulate cannabis. “At a time when 30 states, including Washington, D.C., have legalized medical marijuana and licensed businesses to practice and distribute marijuana to patients and caregivers, access to basic financial stability is virtually impossible to these legal businesses because outdated federal laws allow for this sort of discrimination,” Fried said in her press conference. “Politicians refuse to act, and big banks like Wells Fargo do everything they can to block progress.”

However, support for fixing the banking issue for the cannabis industry also grows as more states legalize marijuana for medical and recreational use, Tvert added. Some pieces of pending legislation in Congress, such as the STATES Act, would help the industry access banking.

“As more states regulate marijuana for medical or adult use, we see more licensed businesses that are needing to use financial services and banking that aren’t able to, and the issue really hits the radar for members of Congress and state officials,” Tvert said.

PNC closed MPP’s decades-old bank accounts last year, citing donations it received from cannabis businesses, which signaled a new level of concern in the industry as financial institutions became wary of not only plant-touching businesses, but also ancillary businesses.

“It’s really an issue that started with the plant-touching members of the industry—the businesses directly involved in production and sale and manufacturing of marijuana and marijuana-related products—and it has since really continued to expand to reach the employees of those businesses and the businesses that provide them services—but don’t actually touch marijuana themselves—to organizations that advocate for laws that allow these businesses to now political candidates who advocate for laws that allow these businesses,” Tvert said.

“The current banking climate currently is and has always been incredibly frustrating,” added Ray Schiavone, CEO of Tahoe Hydro, a Nevada-based cannabis cultivation operation. “Not only does it minimize workability, but it also creates incredible safety risks due to cash management. Wells Fargo closed our accounts while receiving a large investment wire and we almost lost that investor and could have potentially gone out of business.”

And while Tvert said he does not anticipate other politicians being affected by a similar situation, cannabis businesses may feel restricted in donating to campaigns they believe in. “This is a legal industry in a number of states around the country, and these are businesses that are trying to exercise their right to political speech,” he said. “They want to contribute to candidates they support or to fight against candidates that they don’t, and I think they should have every right to do that.”

Top Image: © Pefkos | Adobe Stock

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