Cannabis Industry Gains Attention in Washington, D.C.
The U.S. cannabis industry has finally caught the attention of policymakers in Washington, D.C., after enduring years of debanking challenges. The issue gained widespread attention in December when venture capitalist Marc Andreessen and podcast host Joe Rogan discussed the matter, suggesting that conservatives were being unfairly targeted. Former President Donald Trump soon echoed these concerns, sparking a viral campaign that attracted key industry figures like Flowhub founder Kyle Sherman and Trulieve Cannabis CEO Kim Rivers.
Rivers criticized Bank of America on social media for its contradictory stance on conservative customers, though she declined further comments. Meanwhile, Wyoming Senator Cynthia Lummis highlighted the cannabis industry’s struggles on Fox Business, bringing more visibility to the matter.
Urgent Calls for Cannabis Banking Reform
Kyle Sherman, testifying before the Senate Banking Committee, underscored the pressing need for banking reform in the cannabis sector. Despite Flowhub’s legal standing as a Denver-based software company, Sherman revealed that employees faced discriminatory financial practices:
- Denial of home mortgages due to income source.
- Closure of personal and business bank accounts.
- Rejections for home equity loans and refinancing.
- Predatory lending terms and fees.
- Asset seizures.
Flowhub faced multiple debanking incidents, forcing them to adopt temporary financial solutions. Sherman urged lawmakers to pass the SAFER Banking Act, aimed at ensuring fair financial access for cannabis-related businesses.
Gathering Debanking Stories for Reform
In response to an invitation from Senate Banking Committee Chair Tim Scott, Flowhub created a centralized platform to collect debanking stories from cannabis workers and business owners. Over 110 testimonials were submitted, shedding light on how financial discrimination disrupts daily operations. Sherman emphasized the critical nature of these disruptions, saying, “If one institution drops us, we need to pivot quickly to another.”
Cannabis Tech Firms Also Affected
Massachusetts-based cannabis tech company Rank Really High, which supports over 400 marijuana retailers in North America, has faced similar challenges. Despite being profitable, the company lost payroll and banking services from Paychex, Intuit QuickBooks, and Bills.com due to its cannabis affiliations. Furthermore, a cannabis-friendly bank withdrew a promised bridge loan at the last minute, stalling business growth.
The Human Impact of Debanking
Personal stories reveal the deep impacts of debanking:
- Graham Farrar, co-founder of Glass House Brands, had his accounts closed at Wells Fargo, Bank of America, and JPMorgan Chase, forcing him to secure higher-interest loans from smaller banks.
- Kyle Kazan, also of Glass House Brands, lost his Citi AAdvantage Business credit card despite a 20-year banking relationship.
- Jason Vedadi, CEO of Story Cannabis, saw his family and business accounts shuttered by U.S. Bank, ending a partnership that began when he was 18.
- Andrew Sablon, owner of Dejavu Cannabis Co., faced closures of personal accounts and credit cards by multiple banks, pushing him into debt while trying to sustain his business on Kodiak Island, Alaska.
Persistent Concerns Over Debanking Practices
Jesse Redmond, head of investor relations at Leef Brands, recalls being debanked twice before California legalized recreational sales in 2018. The lack of banking access forced his company to rely on prepaid, high-fee gift cards for transactions. Although his recent banking experiences have been smooth, Redmond remains cautious about potential financial hurdles linked to the cannabis industry.
Final Thoughts: The Need for Legislative Action
The persistent debanking issues highlight the urgent need for federal cannabis banking reform. While industry leaders have found unlikely allies in conservative figures and lawmakers, the sector still lacks reliable financial services. Passing legislation like the SAFER Banking Act would provide essential protections for cannabis businesses, ensuring they can operate safely and efficiently in a regulated market.