With more than 150 investors contributing a total of $27 million to his company, Phil Goldberg still couldn’t get a loan from a bank. It’s not because the banks didn’t want to provide a loan. It’s because they couldn’t. Goldberg is chief executive officer of Green Leaf Medical, a grower of medical cannabis that is distributed by dispensaries. The company has three locations, including a 45,000-square-foot site in Frederick.
“Most banks would be willing to loan (money) to you with those kinds of numbers, but not a cannabis business,” Goldberg said. “That’s still a big problem.”
Medical cannabis businesses may be legal in Maryland, but they have a significant hoop to jump through in order to be successful. Banks typically cannot offer financial services to cannabis-related businesses because cannabis is still federally illegal.
The Bank Security Act (BSA) requires banks to report any suspicious behavior of illegal activity, which would include any transaction with a cannabis business, and banks can be prosecuted for violating this federal law. There has been no official legislation to help banks around this issue in states where cannabis is at least partially legal. The Financial Crimes Enforcement Network (FinCEN) has issued some guidance to help banks — but it’s limiting and strict.
That means that growers and dispensaries usually have to operate as cash-only businesses. Customers must pay in cash, and the businesses themselves usually cannot open a credit card or apply for loans.
Read the full article at ledger-enquirer.com