Canada’s federal government may have promised that marijuana legalization is on the horizon, but you wouldn’t know it from the way banks treat cannabis-related businesses, says downtown Windsor’s Higher Limits.
“It’s insulting. It’s disheartening,” said Jon Liedtke, co-owner of the city’s first and largest medical marijuana lounge, located at 251 Ouellette Ave.
“It’s really unfortunate that there are banking institutions in Canada that don’t want to do business with an industry that is fully legal, coast to coast, and growing … Talk about falling behind the mark instead of trying to be ahead of the game.”
In August, the owners of Hemp Country — a legal marijuana paraphernalia store in Woodstock — were surprised by Scotiabank abruptly cancelling their account after 10 years of doing business together.
Scotiabank spokesman Rick Roth said the company has made a “recent decision to end our relationship with marijuana-related businesses,” stemming from “a reassessment of our risk-management practices.”
Roth said Scotiabank will revisit its risk assessment and make policy adjustments “should there be significant change to the legislation or regulation of this industry.”
RBC had a similar answer when asked about the issue, stating that RBC “does not provide banking services to companies engaged in the production and distribution of marijuana.”
RBC spokesman A.J. Goodman said the bank “periodically reviews the client relationships we have against several factors used to balance the benefits and risks associated with providing them with banking services.”
It’s a familiar tune for Liedtke. He said that when he and his partners were trying to set up Higher Limits at the beginning of the year, they were turned away by two banks — Chase and TD Canada Trust.
“They said ‘No, sorry, we’re not able to work with you,'” Liedtke said. “They’re just not working with the cannabis industry.”
It wasn’t until Liedtke walked into Windsor Family Credit Union that he found a financial institution willing to take his business. “WFCU is great. They welcomed us with open arms. They wanted to provide the account services that we needed. We were happy to work with a local corporation.”
Liedtke also struggled to find a merchant services provider for debit and credit card transactions. He said he approached a services provider on the recommendation of the Canadian Federation of Independent Business — only to be denied when the provider learned the nature of Liedtke’s enterprise.
marijuana legislation will be coming in 2017could grow to billions of dollars over the next decade
, the question must be asked: Why the resistance in the financial sector?
“I think there’s just a lot of confusion,” Liedtke said. “When I first got involved in the cannabis industry, we were told to be ready for ups and downs. Things move very fast, then they move very slow.”
“We know it’s going to be legalized. But it’s still sort of rocky footing. This is why the government needs to really make its intentions clear. We can’t have legitimate businesses like mine and others falling through the cracks, failing to receive the level of services that any business deserves.”
Liedtke said he expects the banks will come calling once the legislation is in place and there are secure profits to be made. “Oh, absolutely. I think these types of problems will disappear quite quickly.”