Business owners in one of Maine’s most profitable industries say that a lack of banking options leaves them either mired in frustrating fees and submitting to privacy violations, or forgoing banking altogether and running risky cash-only options.
Proposed legislation seeks to fix that.
Sponsored by Rep. Sally Cluchey, D-Bowdoinham, the bill would authorize a study into how Maine can support the banking needs of the recreational and medical cannabis industries, which last year brought in about $500 million and employed thousands of workers.
Maine is home to 332 state-licensed recreational cannabis businesses, including cultivators, store owners, manufacturers and testing labs.
In the medical market, according to Feb. 28 data, there were 1,634 providers — known as caregivers — and 77 active dispensaries.
“While some credit unions will work with cannabis-related businesses, these services are prohibitively expensive and place substantial burdens on the financial institutions,” Cluchey told the Committee on Veterans and Legal Affairs Committee at a hearing this week. “Without access to multiple banking options, many cannabis-related businesses have no choice but to operate on a cash-only basis.”
A cash-only puts both the businesses and their employees’ personal and financial security at risk, Cluchey said. It also increases the likelihood of “bad actors” entering the illicit market.
There are drawbacks for the banks, too. Because cannabis is still federally illegal, financial institutions run the risk of violating the Controlled Substances Act and being considered money launderers under the Bank Secrecy Act.
Financial institutions have said the regulations in place are burdensome for banks. Many would rather continue not serving cannabis businesses than take on the burden.
‘UBIQUITOUS PROBLEM’
The committee approved a nearly identical version of the bill proposed by Sen. Nicole Grohoski, D-Hancock, in 2023, but it died on the study table.
The bill being considered this year directs the Office of the Maine State Treasurer to examine banking solutions in other states that have legal cannabis programs, the barriers and costs to the industry for banking services compared to other businesses, banking efforts at the federal level and what the Legislature can do to encourage federal action. The treasurer would be required to submit a report by Dec. 3.
Ohio, Oregon, Virginia and Washington are among the states that have passed laws specifying that financial institutions serving legal cannabis businesses are not committing a crime, Grohoski said. It’s a small step, but could provide an additional layer of protection.
Other states, including Michigan, Nevada, Ohio and Utah, have created closed-loop payment processing systems where the state acts as the payment processor.
“This is a ubiquitous problem across the country,” Grohoski said.
Cluchey said another option the committee discussed in the bill’s…
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