As the third anniversary of the legalization of cannabis in Canada approaches, retailers say they continue to struggle to gain access to basic financial services from banks.
Industry experts say decades of stigma, as well as international pressure, is plaguing the fledgling industry, forcing shop owners to ditch their savings to open their own small businesses and limiting the sector’s growth. Is.
Kingsway Cannabis owner Charles Varabioff says finding a bank to take over his business account was next to impossible.
“I Tried Every One Of Them. And Each One [of the banks] Was ‘No, no, no, no, no,'” he said.
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Branch managers, he says, will tell him the cannabis industry is too high-risk.
“High risk? It doesn’t get any more high risk than a casino, bar or restaurant,” said Werabioff, a shop owner in Grand Forks, BC.
“We are legal, licensed, regulated by the city and government. Canadian banking needs to engage with this industry.”
Most cannabis retailers unable to obtain checking accounts
The Association of Canadian Cannabis Retailers (ACCRES) says 50 of its 52 members in BC have been denied access to traditional banks, and have turned to local credit unions instead.
“We’re not even talking about loans or credit cards,” said Jacqueline Pehota, executive director of ACCRES.
“We’re talking about very basic financial services like a checking account. My members are still struggling, three years after cannabis legalization in Canada.”
She says that only two of her members were able to access banking services with a traditional bank and this was due to her longstanding business relationship with the bank while working in other industries.
“Even those people were surprised by the treatment they received when they visited those institutions. Chatting about a company that has the same directors, same makeup, it’s a legit product, same The regulatory framework is there, and when they come up with a cannabis business the bank goes ‘Who, Who, That,'” he said.
In BC, there are 400 legal cannabis retailers. Pehota believes that there will be more if cannabis retailers can access financial support from banking institutions.
Many of Canada’s national banks also operate internationally. And although the retail sale of cannabis is legal in Canada, it is still illegal in many other countries.
Pehota believes that the stigma of the industry, especially as it is viewed by international markets, has forced many Canadian banks to stay away from the sector.
“U.S. risk-averse banks are particularly challenged by this particular file,” she said.
“I think we cannot underestimate the impact of stigma. We are talking about 80 years of prohibitive rhetoric that has been very prominent in society.”
Some states have legalized the recreational use of cannabis, but most have not.
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At the same time, she says Canada is fairly progressive in the way it looks at the cannabis industry, yet many international markets view it through a more conservative lens.
Mike Schilling, president and CEO of Community Savings, agrees. Their credit union BC . Represents more than 50 cannabis retailers in
“Banks are afraid of the outside reach of US laws and that makes it more difficult for them,” he said.
The cannabis retail sector is a budding industry with high regulatory oversight. Schilling believes that traditional banks may see this as more work than it’s worth.
“We need to do a lot of checks and balances. And I think the banks have made an economic decision that there’s no big advantage in that.”
He admits that the shadow of prohibition still looms large over the industry, although he says many fears are misplaced because the industry is largely populated by small business owners who are providing a service that their community craves.
Schilling said, “If you want to launder money, which is probably the major concern, you can do it through a florist or a bakery. The last place I would do it is through a cannabis retailer because that’s what everyone else is doing.” watching.”
untapped potential of the area
Cannabis retailers are being frozen by banks, Pehota says, adding that it is placing an undue burden on the new industry and the small business owners operating within it.
She says owners are having to delve deeper into their savings because they can’t secure credit cards or small business loans from banks or credit unions to help launch their storefronts.
Varabioff says he spent more than $250,000 in personal savings at the opening of Kingsway Cannabis.
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Also, it creates challenges for retailers when they want to expand their brand outside the province. Credit unions are often local to a province or to a specific community. Pehota says that when an institution does not have a national presence, it can create logistics difficulties.
Overall, she says the hesitation of national banking institutions is short-sighted, and they are failing to see the potential economic opportunity created by legalization.
“This is the territory of BC. It has incredible potential to lift all British Columbians and it’s a real shame to me that we haven’t seen banks recognize this fact and support the region,” she said. said.