Brattelboro
Dan Yates, president of Brattleboro Savings & Loan, said he’s open to providing depository services, mortgages, and small business loans to companies that dispense medical marijuana.
“We are looking right now — I won’t give you the details — at the possibility of providing mortgage financing to a company in Vermont that is involved in the medical marijuana business,” Yates said Friday. He said the bank would also consider small business loans and mortgages.
If Brattleboro Savings & Loan, with $200 million in assets, does work with medical marijuana dispensaries and other cannabis businesses, it will be one of the first Vermont banks to do so, said Chris D’Elia, president of the Vermont Bankers Association. Union Bank, lead by CEO David Silverman, has started working with Vermont CBD businesses in a limited way.
Nationally, more than 360 banks and credit unions work with marijuana-related businesses, according to the Brookings Institution in Washington, D.C., which published a report in April on banking and cannabis. More would like to, but hesitate because of federal regulations that they fear could result in fines or even seizure of property that is being held by banks as collateral.
“That’s a business decision that banks have made,” said D’Elia, who with other bank officials spent time in Washington, D.C. this fall seeking reform of the money-laundering and other laws that prevent banks from working with the lucrative cannabis industry. “We would like to see that change.”
The cannabis business is poised to grow. In all, 31 states, Washington, D.C., Guam and Puerto Rico now allow public medical marijuana and cannabis programs, according to the Marijuana Policy Project. On July 1, it became legal in Vermont for an adult over 21 to possess up to one ounce of marijuana and two mature and four immature marijuana plants. Medical marijuana has also been legalized in Vermont. And on Wednesday, Vermont’s northern neighbor, Canada, legalized recreational marijuana use.
State laws allowing marijuana still run counter to federal law, making banks vulnerable to a number of sanctions. That’s one reason D’Elia and Yates would like to see federal law changed to make it easier for banks to enter the market. They said another reason is public safety.
“Without access to depository services, it’s purely a cash business and then there’s a risk of armed robbery,” Yates said.
It’s also a matter of fairness. Banks and credit unions are already at odds over disagreements on how the two very different entities are taxed and regulated, with banks saying credit unions enjoy an unfair advantage. D’Elia and Yates said the federal regulatory structure makes it easier for credit unions to provide services to cannabis businesses without fear of retribution. Indeed, the Vermont State Employees Credit Union is providing banking services to all Vermont dispensaries, according to Matt Simon, New England political director with the Marijuana Policy Project.
Simon said a bank in Massachusetts is providing services to dispensaries in Massachusetts and New Hampshire.
“The smaller community banks and credit unions are doing it; the larger banks tend not to want to touch it,” Simon said.
Yates was the only Vermont banker who would go on the record as saying he’d like his bank to enter the market. Thomas Leavitt, president and CEO of Northfield Savings Bank, said Friday that “we’re thoughtfully continuing to explore the issues relative to the new Vermont statute and we’re continuing to comply with our federal responsibilities.”
For now, with the midterms approaching, any immediate change in federal law is unlikely. There are bills pending in Congress that would make it easier, or at least less risky, for banks to work with cannabis businesses. Among other things, bankers would also like to see Congress reclassify marijuana; it’s now listed as a Schedule I drug, on par with heroin. But while they wait, Yates, D’Elia and other bankers are talking to Vermont lawmakers and trying to educate as many people as they can about the benefits of entering the new market.
“We’ll also talk to our state Legislature, and encourage them to talk to people in Washington, and I’ll continue to talk to my colleagues,” said Yates, who was headed to an American Bankers Association meeting in Manhattan on Friday. “I’ll continue to encourage them to get in touch with their congressional representatives to push the current House and Senate bill that would provide a safe harbor for us.”