Another federal official is calling on Congress to reform cannabis banking.
“Legalization in some form is going to happen,” said Rodney E. Hood, a board member of the National Credit Union Administration (NCUA), “and the abdication of responsibility to address these issues in Washington is simply ludicrous.”
Hood delivered the remarks last Thursday at the Payments, Banking & Compliance in the Cannabis Industry conference. He acknowledged how attitudes, and laws, regarding cannabis have changed in the past decade.
“For example, when I first served on the NCUA Board,” Hood said, referring to a 2005-2009 term. “I don’t know that I would have attended this type of conference. Of course, that’s assuming I would have been invited in the first place.”
However, Hood was clear in his current message. He thinks federal cannabis reform is overdue.
“It is time for federal action to clarify and harmonize,” said Hood, according to a press release, “the laws and regulations surrounding the state-legal cannabis industry and marijuana-related businesses so that this industry can take part in the legitimate financial services industry.”
The SAFE Banking Act hasn’t stirred in committee. Lobbying groups like the Marijuana Policy Project and National Cannabis Industry Association submitted comments on Chuck Schumer’s Cannabis Administration and Opportunity Act draft. However. even if the CAO Act is introduced before the midterm elections, comprehensive federal cannabis reform in a single bill is a tall order.
Profiles in Legalization is doing its part to keep up the pressure. In the third part of our cannabis banking series, cannabis executives in Michigan and New Jersey lend their thoughts. Further excerpts from Hood’s speech follow.
Profiles in Legalization asked cannabis community leaders for their thoughts on the need for cannabis banking. This article is the third in a continuing series based on their responses.
Click here to see all SAFE Banking Act of 2021 coverage.
Contents
Stanley Okoro, President & CEO, 420NJEvents
“It’s hard enough for Black and Brown folks to get any kind of bank funding; it’s ten times harder in the cannabis industry.”
“It limits you from doing a lot of things.” Stanley Okoro told Profiles about lack of banking during a recent phone interview. “And not only from just the Black and Brown community, the lack of bank backing limits all cannabis businesses.”
Okoro co-founded 420 NJ Events in 2017 with fellow entrepreneur and “brother,” Brendan Robinson, though he says he’s been involved with cannabis much longer. He points out that the banking problem is more than just business.
“You can’t even get a house.” Okoro said. “You won’t be able to get a home loan because banks won’t accept any kind of cannabis businesses. Period.”
When New Jersey passed adult-use cannabis laws last year, social equity wasn’t just a goal; it was mandated. One of the provisions created a tax to benefit those harmed by the Drug War.
Robinson’s father and Okoro’s uncle were both absent for a decade of their childhoods. Both older men received mandatory-minimum sentences of 10 years in prison for cannabis. Now the childhood friends are accumulating cannabis businesses, but their growth is slowed by lack of institutional funding.
Even though they don’t grow or sell cannabis, they are still affected by the stigma.
“We got to jump through hurdles just because we’re a cannabis-related business,” said Okoro. “We have that ‘420 NJ’ in our name, so banks view us as a cannabis business, and we’re held to the same standards as a cannabis business.”
Okoro compared the financial restrictions to a strange hold on their business potential. Some communities of color look to cannabis as a creator of generational wealth, a key target in furthering social equity. It’s not hard to see how lack of steady funding makes that more difficult.
“It’s hard enough for black and brown folks to get any kind of bank funding,” Okoro told us, “it’s ten times harder in the cannabis industry.”
Narmin Jarrous, Chief Development Officer, Exclusive Brands
“Cannabis banking reform is crucial to continue to move the needle for social equity in the cannabis space.”
“The obstacles faced when it comes to cannabis banking are one of the many deterrents in garnering more participation from Social Equity applicants,” says Narmin Jarrous, the chief development officer for Exclusive Brands, LLC.
Exclusive is a Michigan company with cannabis brands like Terpene Tanks, Concentrate Kings and Magic Edibles. The company has four locations in the state, including Grand Rapids and Ann Arbor. Like so many cannabis companies, they are vertically integrated for future growth.
Jarrous told Profiles that the need for cannabis banking reform is critical.
“People are having their bank accounts shut down for participating in a legal industry,” says Jarrous, “and that’s unacceptable and causes more damage on people from communities that are disproportionately impacted by marijuana prohibition.”
Jarrous has led Exclusive’s social equity efforts since joining the company in 2019. She thinks professional financial services are a necessary tool for reaching the industry’s goal of becoming more inclusive.
“Cannabis banking reform is crucial to continue to move the needle for social equity in the cannabis space.” Jarrous says.
And now a NCUA board member is lending his voice to the growing cannabis chorus.
Rodney E. Hood, Board Member, National Credit Union Administration
“Legalization in some form is going to happen, and the abdication of responsibility to address these issues in Washington is simply ludicrous.”
More excerpts from NCUA Board Member Rodney Hood’s speech at PBC 2021 on September 9:
“I’ve spent a good deal of time and energy on this issue over the last couple of years, talking to experts on the legal side, on the industry side, in the financial services industry. I’ve heard a variety of perspectives, but there’s one common refrain: they all agree that legalization is a matter of when, not if – and they urge federal action to get it done.
“The bottom line is this: Legalization in some form is going to happen, and the abdication of responsibility to address these issues in Washington is simply ludicrous. This is precisely the time we need leadership at the federal level to steer this ship in the right direction. In one of my discussions with an attorney who works on these issues, he noted that this is a unique opportunity to create a completely new industry – but that will require rethinking an outdated approach to marijuana that centers around the prohibition mindset.
“It’s time to get past yesterday’s logic and focus on the future … And continued inaction, just allowing a patchwork of ad hoc state solutions to take effect, is not my idea of leadership.
“The fact that we haven’t had adequate federal leadership on cannabis banking to date doesn’t mean that we can’t have leadership now, so I’m happy to take what actions I can to create forward momentum. For those of you in the industry, I can’t promise you that you’ll get everything you want—but certainly, if we can address key needs like commercial lending and opening access to electronic payments for this industry, we’ll have made a significant step forward. And my pledge to you is that I’ll be working with you to get it done.”
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