Major NY banks plan to avoid medical marijuana firms
ALBANY — Some of the major federally regulated banks in New York have no plans to do business with the medical marijuana companies that were awarded licenses to grow and distribute the drug.
That means the banks will not accept deposits from the companies and will not allow bank-issued debit cards to be used to purchase the drug.
“While the use of medical marijuana is legal under applicable state laws in some states, the manufacture, distribution, and use of marijuana is still illegal under federal law," a spokesman for Wells Fargo said. "Our policy of not banking marijuana-related businesses is based on applicable federal laws."
Last year, the U.S. treasury and justice departments issued guidelines to banks to quell concerns over medical marijuana banking.
While the guidelines do not grant banks immunity from prosecution or penalties, the New York Times wrote, they were intended to assure banks that they would not be punished if they provide services to legitimate marijuana businesses in states where medical or recreational use is legal.
Despite the attempt to address the industry's concerns, some banks in New York still regard any involvement in the business of marijuana — even on the limited, pilot-scale medical marijuana initiative approved in New York by Governor Andrew Cuomo — to be too risky.
POLITICO New York reached out to several banks that operate branches in New York City, Long Island and in upstate New York to find out whether their branches will be accepting revenue from medical marijuana companies.
Along with Wells Fargo, representatives from PNC Bank, JP Morgan Chase, TD Bank and Key Bank all said that they would not accept funds associated with medical marijuana, citing the federal law against the drug.
“Until we get clarity from feds, we are not banking on marijuana-related businesses,” a spokesman for JP Morgan Chase said.
“As a federally regulated bank, we cannot do business in the marijuana industry because the use of marijuana is still a federal offense," a spokeswoman for KeyBank told POLITICO New York in an email.
Columbia Care, which has licenses to grow marijuana in five other states, anticipates it will have an agreement with a financial institution, as it has in other states, to allow patients to pay with ATM or debit cards, rather than cash.
A spokesman for Columbia Care said in an email that the company "anticipates that, like our operations across the country, more than half of our transactions in New York State will be electronic via cashless ATM/debit cards. All of our pharmacies will have industry-leading security measures in place to ensure the safety of our patients, employees and neighbors."
The CEO of Empire State Health Solutions, which has a sister company in Minnesota that was awarded two licenses to grow medical marijuana in the state, said the company was finalizing a deal for banking.
"We look forward to implementing a similar structure to ours that is currently operating in Minnesota," Kyle Kinglsey said in an email.
In a similar vein, Teddy Scott, the CEO of PharmaCann— which also has license to grow marijuana in Illinois— said they're in discussion with banks in New York to be able to deposit medical marijuana revenue.
None of the companies went into detail about what financial institution they would partner with.
The remaining two medical marijuana companies — Bloomfield Industries Inc. and Etain — did not respond to inquiries.
In Colorado, where recreational use of marijuana is legal, licensed and regulated shops are doing business on an all-cash basis, which can cause a number of security concerns.
Both the Times and NBC News have detailed the strain on Colorado-based marijuana companies of having to operate as cash-only businesses.