An Illinois bank stops serving Illinois medical marijuana businesses, Massachusetts begins its recreational cannabis licensing process, and a Florida MMJ company takes the state to court.
Here’s a closer look at some notable developments in the marijuana industry over the past week.
Illinois banking issue
The Bank of Springfield’s decision to quit working with Illinois medical cannabis companies serves as a reminder of the tension a lack of banking services creates for the U.S. marijuana industry.
“I feel like I’ve been a broken record for the past several years,” said Adam Scavone, a marijuana-focused attorney in Chicago. “It all comes down to, we need federal action.”
Until Congress guarantees banking access for the U.S. marijuana industry, Illinois’ MJ businesses have some alternatives:
- Scavone noted that a few smaller financial institutions still serve Illinois marijuana companies.
- Zach Zises, the owner of Dispensary 33 in Chicago, wrote in an email to Marijuana Business Daily that there are still “a half-dozen or so banks still working with licensed cannabis companies in Illinois, but they only carry a few accounts each.”
That doesn’t ease the pain for companies like Justice Grown, one of Illinois’ licensed MMJ cultivators.
Justice Grown CEO Ashley Peterson called the Bank of Springfield’s move “a kick to the stomach.”
She said her company lost an account about a year ago when a bank unilaterally decided to stop working with MJ businesses.
Since then, Justice Grown and its subsidiaries have been dealing completely in cash, including a dispensary the company recently launched in Pennsylvania and a grow facility it owns in California.
One silver lining, Scavone said, is that the Bank of Springfield’s decision may not portend a wider trend of financial institutions cutting ties with MJ clients.
The bank said U.S. Attorney General Jeff Sessions’ revocation of several MJ-related policy memos prompted its policy shift.
But Scavone takes heart in the lag between Sessions’ announcement in January and the bank’s April decision to close cannabis accounts.
He believes it’s more a case of bankers being extremely cautious.
“We haven’t heard anything from (Illinois’) U.S. attorneys,” Scavone said. “They didn’t come out and say, ‘The memos have been rescinded, we’re going to start enforcing against banks.’
“It’s just nerves and skittishness.”
The bank’s move is simply another signal that cannabis reform still has a long way to go.
Massachusetts’ application wave
The recreational marijuana licensing process opened in Massachusetts with 218 companies submitting applications, and many more businesses are expected to apply for licenses when new application windows open.
While Massachusetts became infamous for its painfully slow rollout of medical cannabis businesses, one member of the state’s Cannabis Advisory Board believes a few stores will be selling rec cannabis by the July 1 program launch target.
Of the applications filed Monday, 89 came from companies with MMJ licenses that, under state law, were entitled to a first crack at rec permits.
Of those 89, only 22 are currently operational.
Many of the rest are still trying to find municipalities that will accept their business or face other hurdles to opening.
“Many of those will never come to fruition because a lot of those people are still going to be fighting trying to get local approval,” said Shanel Lindsay, an advisory board member and president of Boston-based Ardent Cannabis, a medical device and biotech company.
“If they’re having problems with the medical process in a town, they’re likely going to have problems with the adult-use process in that town,” she noted.
There are two primary reasons why operational MMJ businesses that have applied for recreational licenses have good odds of opening July 1, according to Lindsay:
- The Cannabis Control Commission is eager to launch the rec program on time, so regulatory foot-dragging won’t be an issue.
- Although more than half of Massachusetts’ municipalities have issued bans or moratoriums on adult-use operations, those that have allowed MMJ businesses will likely be willing to also host a recreational company.
“The people who are medical operators are in the best position,” she added “because they’ve been able to show the communities they’re in that the sky doesn’t fall.”
Impatient in Florida
Trulieve, one of Florida’s most ambitious medical marijuana companies, filed a lawsuit against the state’s cap that limits each licensee to 25 dispensary locations.
In a nutshell: Trulieve argues that when it applied for a license, it didn’t specify how many storefronts it would have, yet the state granted the license.
Trulieve believes the state can’t now force the company to limit its dispensaries.
When Trulieve applied for its MMJ license in 2014, Florida was a CBD-only market.
But when Florida’s new voter-approved program was implemented in 2017, the state allowed Trulieve to become an MMJ treatment center and sell full THC cannabis.
According to David Kotler, a Boca Raton-based cannabis attorney, Trulieve’s fight stems from impatience, because the cap on licenses “sunsets in 2020 anyway.”
It’s also worth noting that when Florida’s MMJ patient pool – poised to become one of the nation’s largest – reaches 100,000, each business can open five more stores. After that threshold, a company can open five more for each additional 100,000 patients.
A bigger issue for Florida’s market, according to Kotler, is a lack of supply and diversity of products.
Rather than worry about store numbers, he said, it would be helpful for businesses to focus on getting more brands on their shelves.
“We see in-house brands,” he added, “but we don’t have the diversity of delivery methods, nor brands that other states have.
“Patients are staying in the gray and black markets because of that.”
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