MBank to Close All Cannabis Accounts

By Tony C. Dreibus

MBank, the small Oregon-based financial institution that has serviced the cannabis industry since last year, told Marijuana Business Daily that it will close all of its accounts with marijuana companies in the next two months.

Jef Baker, the CEO and president of MBank, said the cost and time spent on compliance is too much for the Gresham, Oregon-based community bank to handle. The company – which quickly became one of the largest banks serving the marijuana industry – has about 70 to 75 accounts with cannabis businesses, Baker said. Most of them are in Oregon, though a few are in Washington State.

“We just do not have the resources to manage the compliance necessary” to service the cannabis industry, he said. “This is not what we want to do, this is what we have to do. We got into this business to serve an underserved group and I wish we could still do that.”

Aside from putting some marijuana businesses in a difficult position, the decision could present a setback for cannabis banking in general, as MBank’s experience might deter other financial institutions from getting involved in the industry.

“My personal opinion is that it will have a negative effect on other banks’ appetites,” Baker said. “Anytime one of us exits a business it’s a red flag of sorts. I don’t think this is going to be a positive.”

Baker said he will try to stay active in the cannabis industry through speaking engagements and board participation, but the small bank will be unable to serve dispensaries and other cannabis companies in Oregon and Washington.

MBank moved into Colorado for a very short time – one week – before changing its mind, saying it didn’t have the infrastructure to handle all the customers that sought its services. The Denver Post said at the time that federal regulators told MBank that it was too risky to cross state lines and open in Colorado because of the federal illegality of the nascent cannabis industry.

The bank’s customers will have “a couple months” before their accounts are closed, so it will not be “an overnight thing,” Baker said Friday afternoon.

While Baker said he wants to see the industry’s problems with banking solved, small community banks such as MBank likely will not be able to service the industry because of the cost of compliance.

“It’s going to take a large bank with a lot of resources,” he said.

Tony C. Dreibus can be reached at [email protected]

 

18 comments on “MBank to Close All Cannabis Accounts
  1. marcus green on

    The MJ industry need to get wise and form a off-shore holding company and open their bank accounts in another part of the globe.This is a no brainer move for the industry EVERY Major U.S Corporation has a structure for this , this is way they don’t pay any taxs. but it has to be done in a “smar and legit way to keep the authorities off their backs. more information contact the email

    Reply
  2. Juliann Blanford on

    If compliance was the issue, why not charge the MJ companies an extra fee to hire more lawyers, risk managers, consultants etc… to deal with all the compliance? I’m sure the industry would have been happy to pay fees in order to get legitimate banking…

    Reply
  3. Nate on

    Our bank simply charges additional fees to help them handle the large load of compliance.. Sounds like these guys bit off a little more than they could chew.

    Reply
    • Winston Throgmorton on

      Absolutely. Servicing between seventy and seventy accounts was way too much. The diligence required to handle that is way beyond even a large bank’s resource. Smaller banks with half a dozen or fewer accounts will lead the industry. Compliance must be satisfied.

      Reply
  4. Rick Bieniak on

    The banking situation will be no problem at all in the long run. Look into what Tommy Chong wants to do with his “Green card”. Also, ask Willie Nelson. Also, both Chile and Uruguay have ended the prohibition on a federal level… and then there’s the Netherlands.

    Reply
  5. Dr Steven Siegrl on

    They have to be talking about banking regulators compliance. BioTrackTHC deleting government and commercial traceability system also has a banking dashboard that Vets out So the technology exist to cut their overhead and increase our profits therefore this is got to be government compliance and fear

    Reply
  6. Keith Chase on

    The Federal Gov. is the “LEGAL MAFIA” They want too bust dispensaries, disrupt lives, hurt people all the while with there grimy hands out for taxes i.e. “SHAKEDOWN MONEY” A REVOLUTION IS COMING SOON TO A TOWN NEAR YOU!

    Reply
  7. A dispensary in ORegon on

    I had an MJ account with m bank. $250 a month minimum or one percent of your profits, yes it does sound a little like the mafia, but it gets worse they were raising them to $400 a month, as a new business I couldn’t afford that and I doubt any business owner would be glad to pay that amount even if they are doing good. I never felt dirtier in my life depositing cash at MBank knowing that it treated like illegal money and I’m having to pay a lot for what others get paid to do. Tell me that’s not messed up. I don’t blame M Bank they were great and I appreciate them trying the banking compliance was stupid requiring profit and lose statements and other reports that was another thing Extra task that unnessarily burdens a new business when we’re just trying to stay afloat and comply with all the other extra costly parts of running a state regulated business

    Reply
  8. Umma Gumma on

    Well, it looks like a Belgium Bank is coming to the rescue here in Colorado (real soon now). They are interviewing ad agencies this month, and our crack at bat was with them last week to launch their TV commercials, website, billboard and radio ads. After a successful launch here, they have plans to move into California, then Oregon. Granted, there’s no FDIC insurance for your deposits, and you can thank our US Government for that. Any foreign bank opening in the US after 1991 is not able to get FDIC insurance. And herein lies the solution. The FDIC insurance is what creates the headaches for banks already here from companies making deposits and are in the medical / recreational marijuana industry. A foreign bank and one coming here from Belgium where magic mushrooms, pot, hash are legal is just what many marijuana businesses have been needing all along. I’m not allowed to tell you which bank they are (yet) but they are solid, 50 years old and have over $17 Billion Euros in assets. They will be offering checking, banking and CDs for businesses that work in the medical / recreational marijuana industry. Here’s the kicker: FREE checking with any initial deposit of $1,000 for the first 500 businesses that sign up. After that, it’s no more expensive than the current bank fees you pay for your credit union, ATM card withdraws, etc.

    Reply
  9. A Dispensary In Oregon on

    To Clarify my earlier statment, My M Bank account had a $250 “compliance” Fee per month or 1% of your sales whichever was more. They were planning on going to $400 fee a month in May.

    Reply
  10. Juju Blanford on

    “A Dispensary in Oregon” : Gotcha. That is really steep 🙁 I’m sure you read the comment from Umma Gumma about the other banks coming to Colorado and then Oregon… We can hope…

    Reply
  11. Gabriel on

    Read the details of what a bank has to go through compliance wise and you will understand why none of them are breaking down the door to get into this business. It’s ridiculous and intrusive not only for the bank but the MJ business owner.

    Reply
  12. Winston Throgmorton on

    Most of these comments are sophomoric. I know first hand what these banks are going through. The banks cannot lose their charter because of one bad apple. Presently, any bank that deals with the industry is risking their charter. Even strictly complying with BSA and compliance is difficult as both have their own interpretations of the Cole memo and FinCen. Don’t be taken in by a European bank that purports to have the problem solved. If you’re in the industry and you’re within U.S.jurisdiction you are subject to the Feds. Search out banks that are cautiously stepping into the industry. Paying fees to that bank for allowing you to be a customer is a privilege. Note I say allowing you to be a customer. A bank that is risking their charter to be a part of this new wave does not have to accept nor need to accept just anyone. Nor should it.

    Reply

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