“There’s a high degree of urgency, so it’s something we need to start talking about,” Hoffman said in an interview. “Unfortunately, it’s a real possibility” that the recreational industry won’t have access to any banking services, he said. “We’re working as hard as we can to preempt that, but we can’t force any bank or credit union to service this industry.”
Without banks, marijuana businesses would have to deal exclusively in cash — for sales to customers and between retailers and suppliers, to meet payroll, and make tax payments to the state. Storing and handling potentially tens of thousands of dollars could invite robberies, law enforcement officials warned, and complicate tax collections and efforts to track the sale of the drug and prevent it from being diverted to the black market.
“If word gets out on the street that there’s large amounts of cash on hand at these places, someone’s going to roll the dice and go in with weapons,” said Chelsea police chief Brian Kyes, vice president of the Massachusetts Major City Chiefs of Police Association. Hoffman’s suggestion “for some mechanism that would remove the cash,” Kyes said, “would certainly be a positive step.”
The shortage of banking services is the latest challenge as Massachusetts approaches a July 1 deadline to begin sales of legal pot. The cannabis commission has been sparring with the Baker administration over the scale of the industry at the outset, with the governor advocating for a smaller, more controlled rollout and the commission proposing an expansive range of retail options.
Baker’s office was cool to the idea of a government bank Wednesday, saying it has no plans to create such an entity.
Hoffman said he has not discussed the idea with other state officials, and acknowledged such an entity would likely need to be authorized by the Legislature, where some lawmakers remain steadfast opponents of marijuana despite legalization by voters in 2016.
He said discussions with Massachusetts financial institutions left him feeling pessimistic, with some executives saying they doubted they could convince their directors, or members, in the case of credit unions, to overcome their reservations at a time when US Attorney General Jeff Sessions has threatened to crack down in states where the drug is legal.
Currently, Century Bank of Somerville is the only Massachusetts bank that accepts deposits from the state’s medical dispensaries, according to industry executives.
It’s unclear if Century will offer services to recreational pot companies, and the bank did not return requests for comment. But a federal budget rider that offers protection to businesses involved in medical cannabis does not apply to recreational pot.
Even if Century takes the plunge, industry experts doubt one bank can handle the Massachusetts recreational industry, which is projected to generate more than $1 billion in sales by 2020. There’s also some fear in the industry the Trump administration will rescind federal banking protections for cannabis that were put in place under President Obama.
Larger banks, which have federal charters or operate across state lines, generally refuse to work with marijuana companies for fear of triggering a crackdown. In their place, a meager patchwork of state-chartered banks and credit unions have entered the pot business in other states where the drug is legal.