By John Schroyer
A prominent New York credit union reveals that it’s willing to work with at least one medical cannabis company, another dispensary delay in Nevada, and legislative moves in Washington State present a mixed bag for marijuana businesses.
Here’s a closer look at several notable developments in the marijuana industry over the past week.
Bank on It
It’s not very often that there’s good news on the banking front in the marijuana industry, but an announcement this week appears pretty positive.
Fiorello Pharmaceuticals – one of the 43 applicants vying for the five MMJ business licenses in New York – said it has reached an agreement with SEFCU Credit Union to obtain banking services should the company win a permit.
“It’s a huge deal,” said Ari Hoffnung, CEO of Fiorello. “This partnership will promote public safety and allow us to pay our employees not in cash but through direct deposit. That seems like a trivial matter to most American businesses, but those in the cannabis industry realize that being able to get a bank account is anything but trivial.”
The fact that SEFCU is willing to publicly acknowledge its relationship with Fiorello is step in the right direction, since most banks that are open to working with cannabis companies don’t want their cooperation advertised.
It’s also a bright spot in an otherwise dim period for cannabis banking, as some of the most recent headlines have been about financial institutions either pulling back from the industry or canceling plans to provide services.
A spokesman for SEFCU could not be reached for comment, so it’s unclear whether the credit union will also offer banking services to other applicants in New York. But in a press release, executives from SEFCU hailed the deal as a “ground-breaking partnership” and said they are “pleased” to be working with Fiorello.
“They understand the regulatory challenges in this industry, and they understand the risks involved in managing a business as a cash-only business,” Hoffnung said.
Hoffnung couldn’t say whether SEFCU will provide banking services to other cannabis companies in the state. But he fully expects that all of the five license winners will be able to obtain similar services, partially because of how strict New York’s regulations are for MMJ companies.
Those tight rules will help relieve some of the concerns bank executives have, he said.
NV Waiting Game
Introducing the latest dispensary to almost open in Nevada: Silver State Relief.
The dispensary had hoped to begin regular business operations in a suburb of Reno this week, but is was forced to delay its opening like at least one other before it.
Silver State Relief encountered problems tied to new rules on pesticides and a lack of clarity from the state on testing guidelines.
Which begs the question: When will dispensaries actually start serving customers?
“In my opinion, realistically, the earliest you will see a dispensary open will be in August, but I think a more likely opening date will be early September,” said Amanda Connor, a Nevada attorney who’s been working with the industry. “The main reason that we’re not seeing dispensaries open at this point is there’s not product for them to sell. I know a few cultivations that are getting close to their first harvest, and they’re saying they’ll be ready sometime in August, but labs still have to test the product.”
Connor said she expects one or two to open by mid-September, and predicted as many as 15 will open by the end of the year.
Another reason for the delays is confusion over the regulations governing marijuana businesses, though Connor said that’s normal for a brand-new industry like medical cannabis.
Her advice to those in the Nevada cannabis trade? Talk to each other.
“Dispensaries need to be communicating with the cultivators so that when they say, ‘We’re going to open on whatever date,’ they can verify and make sure that product is going to be available,” Connor said. “I know it’s extremely frustrating, because people have been expecting these to start opening for some time now. But it is going to be a great industry once it gets up and running, and we’re at the tail end of the wait.”
MMJ, Rec Developments in Washington
Kiss the idea of starting a cannabis club in Washington State goodbye, and prepare for the closure of dozens of dispensaries in the Seattle area.
Several developments in Washington recently will impact the state’s medical and recreational cannabis industries, in some cases for the worse.
A bill signed into law late last month that aims to simplify the state’s marijuana tax structure also bans private cannabis clubs, effectively killing off a potential ancillary industry that many entrepreneurs were hoping would take root.
The provision was reportedly slipped into the bill at the last minute, catching industry leaders and MJ advocates off guard, according to a report this week by a local radio station.
To be fair, the tax reform measure itself represents significant progress for cannabis companies and will likely help relieve a lot of the financial burden on many businesses. But it arguably was driven by the widespread acknowledgment that the original tax structure was far too onerous for small businesses, as opposed to general support for the industry.
And the provision banning cannabis clubs is disappointing.
Another development involves a new ordinance the Seattle City Council adopted on Monday to shutter local medical marijuana dispensaries that opened after Jan. 1, 2013. The move is expected to result in the closure of at least 50 of the city’s estimated 99 dispensaries.
And just to the east of the city, in King County, local officials announced they’re targeting 15 unlicensed dispensaries for closure.
The MMJ crackdowns represent attempts by local officials to get their policies in line with the state’s plan to fold medical cannabis into the rec program by next summer. This is discouraging news for dispensaries across Washington, as it looks like both state and local officials are serious about shutting down all or part of an industry that’s existed in a gray area for years.
But rec stores have to be pleased that the state and cities are cracking down on the largely unregulated MMJ industry, which ultimately will create new business opportunities for them.
John Schroyer can be reached at [email protected]