No Mortgages And Bank Accounts for Cannabis Industry Employees
If you’re in the market to buy a house in the United States and you’re one of 428,000 workers in the nascent cannabis sector, you may face additional scrutiny from financial institutions or downright denial of service. Other issues are less likely, but at least one cannabis company CEO reported that his personal checking account was closed – the one he’d had since he was eight and mowing lawns for neighbors.
The issues arise because there is a conflict between state-level and federal laws. Recreational use of marijuana has been legalized in almost two dozen states, and the majority of states allow its medical use. However, the substance is still illegal on the national level.
Business Owners And Execs More Vulnerable Than Workers
According to Steven Kemmerling from CRB Monitor, a company that provides consulting services to the cannabis sector, people here still face a certain level of discrimination, especially if you’re among those at the helm.
In one of the more outrageous examples, the CEO of a cannabis company from Massachusetts, Jeffrey Herold, was denied a mortgage just as he and his wife were closing on a new house and had already sold their old home. They had to stay at a hotel for several weeks while working out another solution – one that involved a mortgage for the wife.
But you don’t need to be high on the corporate ladder to run into trouble like this. Or even have a direct connection to cannabis. Anything ‘drug’-related can be toxic for a bank as the example Sophia Patten and her husband shows. She was approved a mortgage but then joined Workweek – a media company that, like many others, was writing about cannabis. That proved to be enough for the deal to fall through. In the end, they had to pay a higher mortgage rate.
No Easy Fix Coming Anytime Soon
There is no law saying banks can’t provide financial services to people working in the cannabis industry. However, banks are traditionally conservative, and they stay in the business because they can estimate risk and try to reduce it. For them, the decision not to do business with certain individuals from the sector is a form of risk management because legal or not on the state level, the underlying activity is definitely outlawed by the federal government.
There is a federal bill called SAFE Banking Act that seeks to protect financial institutions that choose to work with cannabis companies. This bill enjoys bipartisan support and has cleared the House six times in recent years, but every time it failed in the Senate. Besides, Kemmerling says that even if the bill gets approved the next time around, it won’t be a cure-all. To do away with the stigma and discrimination completely, the cannabis prohibition needs to be repealed at the federal level.
