The Marijuana Policy Project (MPP) has had bank accounts with PNC Bank for 22 years. But on July 7, those accounts will be closed because the bank says it’s too risky with the potential crackdown on marijuana businesses for the them to keep those accounts.
Nick Field, COO of MPP says he was recently informed that the accounts would be permanently closed, according to The Washington Post. When the bank performed an audit on MPP’s accounts, it showed that some of the funding came from marijuana businesses directly handling marijuana plants.
Until now, advocacy and policy groups seemed to be safe in the banking sector.
Field said, “They told me it is too risky. The bank can’t assume the risk.”
A PNC Bank spokesperson did say that, “As a federally regulated financial institution, PNC complies with all applicable federal laws and regulations.” PNC Bank declined to comment on the relationship it has with MPP.
MPP was formed in 1995 and has held accounts with PNC Bank since then.
Other advocacy groups say that this is one of the unpleasant side effects of the marijuana industry in states where it is legal. The uncertainty regarding protections for these legally operating businesses is also increasing.
The Justice Department failed to respond to requests for comment on the situation. The Cole Memo of 2013 does not offer enough protections, according to the American Bankers Association.
Rob Rowe of the American Bankers Association said, “Because marijuana is illegal under federal law, banks accepting any money associated with its sale could be investigated for money laundering.”
MPP and other advocacy groups like NORML, say that the bank is blowing things out of proportion. To date, the Justice Department hasn’t investigated a bank working with state-legal marijuana businesses.
Field pointed out that advocacy groups are strictly scrutinized by the IRS as well. Field said, “We are a registered 501(c)(3) and (c)(4). We have yearly audits. We are compliant with the IRS. It doesn’t get any clearer than that.”
John Hudak, marijuana policy expert, says that this action reflects the fears of a Jeff Sessions rollback of protections for the legally operating marijuana businesses. He said, “It’s no secret. It’s a situation that is creating an increasingly uncertain policy environment.”
Representative Ed Perlmutter of Colorado introduced The Secure and Fair Enforcement Banking Act, which has 44 congressional co-sponsors to help marijuana-related businesses have access to banking institutions.
Mason Tvert of MPP, said, “It’s one thing to take a position about making marijuana legal. It’s something different to say these businesses should be able to bank legitimately.”