The marijuana and banking industries may seem like an unlikely lobbying duo, but both are tuned into Washington, D.C., where a bill currently meandering through a Senate committee could open the regulatory door for the two to work more closely together.
Although marijuana has been legalized in some way in more than 30 states—including Louisiana—its ban at the federal level has largely cut the cannabis industry off from banking services, leading many companies in the industry to operate by cash only.
Operating on a cash basis, however, is risky and can open up a multitude of problems for companies, including security threats and difficulty in accessing credit, says Chanda Macias, president of Ilera Holistic Healthcare, which grows therapeutic cannabis for Southern University.
Despite the known banking challenges facing cannabis-industry companies, LSU requires its growing partner to be backed by a financial institution. Similarly, the Louisiana Board of Pharmacy required that applicants vying for the state’s nine medical marijuana pharmacy permits be serviced from a Louisiana-headquartered bank.
Ashley Mullens, LSU AgCenter’s medical marijuana program coordinator, says early in the program’s development, the AgCenter met with LSU’s internal accounting division for guidance because the university banks with a federally chartered bank. Through the bid process with growing vendors, the AgCenter required a documented relationship with a Louisiana-chartered bank.
GB Sciences, the company LSU chose, had a relationship with Avoyelles Parish-based Cottonport Bank, so the school also chose Cottonport for its new account.
“Cottonport was the saving grace of us all,” Mullens says.
However, unclear is why executives at Cottonport Bank are electing to do what others here will not. Read the full story about the banking situation from the Nov. 5 edition of Business Report.