Two Canadian banks have announced that they are no longer willing to do business with cannabis companies.
Royal Bank and Scotiabank have announced that they are no longer willing to open new bank accounts for cannabis-related companies. The Canadian banks also plan to close existing accounts for cannabis businesses.
Taking the initiative even further, Scotiabank is severing ties with Hemp Country, a business that produces hemp and ancillary products for cannabis consumers. Hemp Country does not actually produce any cannabis-infused products.
A spokesperson for Scotiabank told CBC news that the decision “stems from a reassessment of our risk management practices. While we strive to be the bank of choice for our small business clients, and we are proud of the strong relationships we have built in all of our communities across Canada and abroad, we must balance that with our commitment to effectively manage all business risks.”
Nathan MacLellan, owner of Hemp Country, was upset about Scotiabank’s decision to terminate their 10-year relationship.
“It’s kind of insulting really, especially when legalization is right on the horizon,” he said.
“Nothing in the store that we sell is illegal. Every single variety store sells pipes and bongs nowadays, so why are they singling us out all of a sudden?”
The timing of the decision by the big banks is curious as the legalization of recreational marijuana in Canada is expected to be implemented in 2017. Current Canadian Prime Minister Justin Trudeau ran and was elected on a campaign that focused heavily on legalizing cannabis.
Unbanked cannabis businesses in the United States have struggled to operate without access to the financial system. Companies scramble to demonstrate transparency and often have to keep cash on hand instead in a bank vault. Cannabis and cash under the same roof have made some businesses a target for criminals.