Photo via iStock/ Jikaboom
Cannabis is now legal in some form in the majority of U.S. states, but the federal prohibition of marijuana has provided an incessant stream of roadblocks for businesses and individuals hoping to take part in this exciting new industry. One of the major impediments to the cannabis industry's success is the law prohibiting financial institutions from handling any funds even tangentially related to marijuana. This impacts everyone in the industry, from nationwide cannabis corporations down to the individuals who are simply trying to make a living working in this new field.
In Alaska, one of the state's three cannabis testing facilities has just been forced to close after Wells Fargo bank threatened to foreclose on the lab's landlord. Steep Hill, a well-established cannabis testing company that runs a number of labs throughout the country, has been fully licensed by Alaska regulators to operate a cannabis testing facility. The company rented office space in Anchorage to set up their lab, but the building's landlord is now being forced to evict them by Wells Fargo, who holds his mortgage loan.
“We are sorry to announce that Steep Hill Alaska will be suspending cannabis testing operations on March 31, 2018,” the company said in a statement reported by the Juneau Empire. “We have to relocate because Wells Fargo called in the loan on our building. They will foreclose if we do not move out — just because we are a cannabis business!”
Late last year, Wells Fargo officials notified the building's landlord, Brian Horner, that they were planning to call in his loan because he was renting to a canna-business. Horner reportedly attempted to find an alternative lender, but these attempts also failed due to his financial association with the legal marijuana sector. In the end, Horner had no choice but to evict Steep Hill or lose his property.
Alaska, which has been struggling to achieve reliable testing results from its canna-labs, will have to depend on its remaining two testing facilities until Steep Hill can find a new home. Brandon Emmett, a member of the state's Marijuana Control Board, believes that the state will be able to weather the hardship, however. “The businesses that use Steep Hill are going to be inconvenienced…obviously Steep Hill is going to be extremely inconvenienced, but as far as the industry as a whole is concerned, I don’t think it will be a major issue,” he said to the Juneau Empire.
Business owners are not the only ones suffering at the hands of the government's cannabis banking laws. In Rhode Island, a canna-business employee was recently denied financing for a home mortgage because his main source of income was from a marijuana-related business. Last year John Guardarrama, an employee of Summit Compassion Center, a state-legal medical marijuana dispensary, was pre-approved for a home loan, but in January, Guardarrama was told that his final application was denied due to his choice of employment.
Christine Hunsinger, Assistant Deputy Director for Policy and Research for Rhode Island Housing, said that federal housing guidelines cause problems for state-legal medical cannabis employees. "Regarding compassion center workers, most of our loans are FHA (Federal Housing Administration) loans, which must comply with their underwriting guidelines," Hunsinger said to GoLocalProv. "FHA will not purchase or invest in a loan where the borrower is employed by or receives compensation related to the marijuana industry."
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Issues like these have driven activists, industry leaders, lawmakers, and state officials to push for legislation that would allow banks to service state-legal canna-businesses and workers. Last week, treasurers from four canna-legal states wrote a letter to Attorney General Jeff Sessions requesting a meeting to discuss the issue. A bipartisan group of lawmakers are also currently attempting to push legislation through Congress that would prevent the Justice Department from penalizing or prosecuting any banks that choose to serve the cannabis industry.