The main bank serving Illinois medical marijuana companies is pulling out of the industry, leaving operators with few options other than dealing in cash.
Bank of Springfield sent a letter to its cannabis clients late last month informing them that their accounts will be closed May 21. The decision is tied to the reversal of an Obama-era policy that discouraged prosecution of those operating under state marijuana laws.
The move is a setback for the industry, which remains a pilot program more than two years after medical cannabis became legal in Illinois. Strict regulations and other obstacles have added challenges to running cannabis companies and kept patient numbers too low for some operators to recoup their investments.
Taking away the bank accounts medical marijuana companies use to pay their employees, vendors and the government is another hurdle. It also eliminates some of the legitimacy and traceability of transactions that banking added to the industry, which had $8.5 million in retail sales statewide in February, according to the Illinois Department of Public Health.
Everyone, from his employees to the cultivators his dispensary buys product from, is paid in cash. The method has caused some hiccups, especially when it comes time to pay taxes, Knapp said. For security reasons, he declined to disclose how everyone gets paid. But he has found a way to make it work.
“At this point, we’ve got it down to a pretty well-oiled machine,” Knapp said. “But if someone’s used to paying with checks or electronically, they may be in for a little bit of a rude awakening.”
Thrive Dispensary, with locations in downstate Anna and Harrisburg, keeps its money in a safe within a safe, said director and co-owner Gorgi Naumovski. The dispensaries have been without a bank for about six months.
The dispensaries don’t keep a lot of cash on hand since it’s being used to pay bills, Naumovski said. The customers, who paid in cash anyway, don’t notice the shift behind the scenes. But there’s a ripple effect that compounds into a potential problem as cash moves up the marijuana supply chain, he said.
“It’s just a shame,” Naumovski said. “At the end of the day, (the bank is) protecting themselves and it just makes it tougher for all of us.”
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