Earlier this month, Ohio regulators finished drafting the rules for the state's medical marijuana program, slowly setting the wheels in motion for implementation next year. Although the state’s freshly baked legislation has yet to take effect, there are already issues placing local marijuana businesses in a financial quandary.
Cannabis companies in the Buckeye State are at a major disadvantage when it comes to finding banking institutions that will accept their legally earned cash. This financial issue is a burden for the legal pot markets across the United States, primarily because federal illegality makes the industry a risky bet for banks. But in Ohio, even state-chartered banking services are turning their backs on medical marijuana businesses.
“All of these medical marijuana enterprises are going to become targets for theft because the bad guys are going to know there’s lots of cash in these businesses,” says local Attorney David Patton, who represents a number of medical cannabis startups in the state.
Some have already been negatively impacted by these banking discrepancies. Several weeks ago, the Cleveland Branch of the National Organization for the Reform of Marijuana Laws (NORML), a non-profit cannabis advocacy organization, suddenly had its bank account shut down by PNC. Even though the group was a client for two years, the chapter was informed of the account closure and issued a check for their remaining balance.
This particular case is quite controversial, seeing that the Ohio NORML chapter doesn’t even sell or profit from cannabis itself, raising questions as to why their account was terminated. The matter doesn’t bode well for the state’s medical marijuana industry, and is already causing panic in companies that would prefer not to be forced to operate as cash-only businesses. However, there are a few tactics and solutions that cannabis companies in other states have explored.
For example, in California, lawmakers are considering the possibility of creating public banks that are allowed to take on canna-businesses as clients according to state law. Other businesses have started looking towards cryptocurrencies like Bitcoin as a solution, which offer a secure workaround for the acceptance of credit card payments.
Still, as medical legalization takes root in Ohio and across the U.S., the banking industry’s unwillingness to open its doors to canna-businesses will continue to create a dangerous and vulnerable financial situation for all parties involved.