It was once an industry that dealt solely in cash, with bags of pot and briefcases changing hands in the middle of the night. But now that cannabis is legal, some cannabis retailers are facing roadblocks in trying to get a business bank account.
Port Hardy-based Stellar Jay Organics is on the verge of opening Vancouver Island’s first legal pot shop. Owners Tristan Radzik and Serena Neumerschitsky received conditional approval from the Liquor and Cannabis Regulation Branch in January, and this month passed their final inspection.
But even with the blessing of the province and the municipality, the business faced major hurdles when they tried to open a small business bank account.
Most of the big five banks replied with a flat-out no, saying they did not yet have the policies for cannabis businesses, Neumerschitsky said. “The big banks will have nothing to do with us. Everyone is telling me this is a risk issue. Well, what’s the risk? We’re a legal business.”
It was also a no from Vancouver Island credit unions, and credit unions in the rest of the province said the business was too far outside their jurisdictions.
One major bank said the business could open a commercial bank account but $1 million would have to be kept in the account at all times. Another bank said Stellar Jay Organics could apply for a bank account for a $3,000 non-refundable fee, but that wouldn’t guarantee an approval. Neumerschitsky did not want to name the bank for fear of jeopardizing future relationships.
Neumerschitsky said small cannabis businesses opening in the completely legal market don’t have the same kind of cash-heavy head start as grey market dispensaries now seeking government licences.
“I don’t have a bunch of money in a bank account,” she said. “We’re starting from scratch.”
After speaking to others in the cannabis industry, Stellar Jay was able to secure a small business account with an Ontario-based credit union. Neumerschitsky didn’t want to name the credit union for fear of putting the deal at risk.
“With the piece of paper with the government’s approval, I thought we’d be free from this prejudice, but we’re not.”
Neumerschitsky has talked to other cannabis retailers on Vancouver Island who are facing similar financial roadblocks.
In order to receive a licence from the Liquor and Cannabis Regulation Branch, cannabis businesses must pass a financial reliability test.
The B.C. Liquor Distribution Branch, the government body which operates B.C. Cannabis Store, could not disclose their financial institution, “as this represents competitive business information,” said spokeswoman Kate Bilney.
As for private cannabis retailers, they “are responsible for determining their business requirements, and engaging with service providers as necessary,” Bilney said.
None of the major banks responded to requests for comment on their policies for cannabis businesses.
Royal Bank of Canada did not answer questions about whether it serves cannabis businesses. But a spokesperson said in a statement: “RBC will evaluate business relationships in the cannabis space through a similar due diligence process that we use with clients in other sectors. We will work with clients to answer any questions they have as the sector evolves.”
B.C. Attorney General David Eby said he hasn’t heard concerns about cannabis retailers not being approved for bank accounts.
“It seems strange to me that they wouldn’t be able to get bank accounts, this is federal jurisdiction,” Eby said. “And certainly, I’m sure they would understand this is federal law that has legalized cannabis. I certainly encourage any licensed producers or retailers to feel free to contact my office and I’ll raise it with federal counterparts.”
With that the Ontario bank account secured, Stellar Jay is set to open in the next two weeks, Neumerschitsky said.