The main bank serving Illinois medical marijuana companies is pulling out of the industry, leaving operators with few options other than dealing in cash.
Bank of Springfield sent a letter to its cannabis clients late last month informing them that their accounts will be closed May 21. The decision is tied to the reversal of an Obama-era policy that discouraged prosecution of those operating under state marijuana laws.
The move is a setback for the industry, which remains a pilot program more than two years after medical cannabis became legal in Illinois. Strict regulations and other obstacles have added challenges to running cannabis companies and kept patient numbers too low for some operators to recoup their investments.
Taking away the bank accounts medical marijuana companies use to pay their employees, vendors and the government is another hurdle. It also eliminates some of the legitimacy and traceability of transactions that banking added to the industry, which had $8.5 million in retail sales statewide in February, according to the Illinois Department of Public Health.
“This is the closest we’ve been to being without banks in Illinois in this industry … which isn’t good,” said Ross Morreale, co-founder of Ataraxia, which owns a cultivation facility in southern Illinois and co-owns three dispensaries. “It makes everything more difficult.”
There are other financial institutions around the state that work with the cannabis industry, but not many. Companies that relied solely on Bank of Springfield or are unable to find another bank might have to start operating exclusively in cash.
PharmaCann, which operates two cultivation centers and four dispensaries, banked with Bank of Springfield, said Jeremy Unruh, the company’s director of public and regulatory policy. The company has another bank in Illinois to fall back on, Unruh said, but some dispensaries and cultivators likely won’t